This is the most recent CEO letter to stockholders off the
website. www.pathobiotek.com. I believe some of what he
discusses is coming together....
kramc
In 1998, we reported our most successful year to date, continued by a growing momentum in the first half of 1999. We have made exceptional progress since 1993 when we began working on diagnostics for multiple sclerosis (MS) and other immune disorders. Six products have been developed and reached the market this year and at least four new products will soon be available to customers. Sales are beginning to grow modestly, but by the end of 1999, we expect significant recognition in the diagnostics market that will drive future revenue growth.
The majority of our research is focused on developing new and innovative MS diagnostics applications and products based on the Luey technology platform. Luey, a human microorganism characterized by scientists at PDI, has been the center of new product development with primary effort given to those products with near term market potential. This platform provides the potential for many new products, as well as additional applications for our existing products. Although there is enough revenue inherent in the Luey technology to exceed our business goals, there are several related products in the early stage development pipeline, which could outperform our current MS diagnostics.
We are concentrating our resources and strengths for the benefit of those suffering with MS, our shareholders and employees. Our efforts to provide quality products and services to MS patients will strengthen our company's revenues and profit. A portion of the earnings will be turned into further research and development of other products based on the Luey technology platform, which will reach a broader market and increase shareholder value. The cost effective nature of our products, as compared with current MS diagnostics, should provide significant savings to the overall cost of related patient care and thereby enable Pathobiotek to provide a high quality, low cost alternative.
Pathobiotek Diagnostic products have a niche market based on over 300,000 MS patients in the US and over 1,000,000 MS patients worldwide. Current tests for MS are costly, lengthy and diagnosis is difficult, but when optimized, Pathobiotek's Generation II MS diagnostic products will provide: ú Earlier diagnosis or prognosis of MS ú A test which takes less than 72 hours to complete ú Significantly lower cost per test with accurate results ú A sensitivity test that provides valuable treatment feedback to the physician
FDA approval is not required for the sale of our research reagents. Approval for this type of diagnostic is a short-term process in which trials could be completed during the year 2000. FDA approval will greatly enhance the visibility of our products and should increase sales significantly.
1998 Accomplishments We objectively evaluated our research and development platforms, resulting in an intensified focus on the Luey technology. Extensive DNA analysis and correlation studies were performed to improve current products and evaluate other product opportunities. This groundwork increased the validity and acceptance of our products with current and potential clients. The improved technology confirmed much of the work done prior to 1998. This is encouraging since we are continually collecting data that supports the earlier work done on Luey. We anticipate continuous improvement in 1999 with significant progress in the area of product development.
We developed several DNA products and product components as working prototypes. Work commenced on an animal model and the development of polyclonal and monoclonal antibodies.
Pathobiotek bought back more than 140,000 shares of stock in 1998. We signed a letter of intent with Focus/MRL Inc. for the development and sale of certain PDI products. The license and royalty agreement was signed in January of this year.
Accomplishments, Plans, Opinions and Expectations for 1999 A licensing agreement was signed with Focus-MRL a reference lab. This agreement should help establish a market for Pathobiotek products as well as provide significant revenues.
Six products were made available for sale in June and at least four more are expected during the 4th quarter of this year. Sales are currently modest but early feedback from customers suggests that we should meet or exceed our sales goals. If sales progress as planned, we should be operating at a monthly profitability rate in 4 - 8 months.
We are negotiating a license agreement with a major diagnostic company. Also, we are seeking a licensing agreement with a major pharmaceutical company. The diagnostic agreement would significantly enhance revenues, as well as increase profits. We anticipate our strategies will establish and maintain shareholder value. A license agreement with a large diagnostics or pharmaceutical firm should yield earnings substantial enough to propel the Pathobiotek share price to a point consistent with the value of the company.
Accomplishments, Plans, Opinions and Expectations for 2000 We expect to enter 2000 with continued momentum as our products continue to gain recognition as "the definitive" diagnostics for MS. We anticipate this will be accomplished by several scientific publications in professional journals, collaborations with universities and institutes, and licensing or partnering with a major diagnostics or pharmaceutical company. Revenue is expected from the MRL license agreement as well as the other new agreements under negotiations. A license agreement with a large diagnostic or pharmaceutical company could yield pre-tax earnings that will significantly increase trading volume and share price.
A move from the NASDAQ - BB to the NASDAQ Small Cap is also anticipated. Stock price varied from $0.375 to $4.125 per share during 1998. In 1999, share prices were significantly lower. We are taking numerous measures to help investors realize the value of Pathobiotek stock. We will continue to work diligently on behalf of our employees, customers and shareholders. The Luey technology is evolving quickly and we expect our products to reflect this growth by establishing a foothold in the niche markets with subsequent increases in earnings. We have developed our products by successfully managing our costs while incurring almost no debt. This strategy has left the Company in a position to earn substantial profits from royalties and licenses with minimal outflow. Our challenge is to sustain the current level of scientific progress to produce earnings consistent with our business plan goals.
The information herein is the opinion of Pathobiotek and not intended to mislead or misinform. Certain facts herein are supportive of our data and opinions are what we believe to be possible within a reasonable period of time. We hope Pathobiotek exceeds our expectations as well as yours and delivers the appropriate rewards to our employees, customers and shareholders. We appreciate your faith and confidence and wish for your continued support. We hope to have the resources to do the work required for success and the wisdom to deploy those resources when, where, and how they are required. We hope that you, our customers, benefit from the Luey technology as we expect and have worked so hard to provide such beneficial diagnostic products.
Sincerely,
Robert C. Simpson, Ph.D. President CEO |
