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Biotech / Medical : ABTI Alpha-Beta Technology

ABTI 0.200

+99,900.0%

Jun 17 12:34 PM EST

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To: Tom Schmitz who wrote (382)	8/3/1997 9:19:00 PM
From: Tom D	of 572

Alpha-Beta has no other product income at present. Just milestone payments from betafectin. The immediate solution for your predicament is to buy August 10 calls at the asking price of 2 3/4. The stock is already 3/4 above the strike price. To pay a premium of only $2 above the strike price when there is a large chance that the drug will be in the high teens or better before the expiration date is a bargain. I still think the stock could be at 13 or 14 before the data release. You might want to take a look at an online service called Investor Insight by Intuit. (I think you can preview it at www.intuit.com). For only $10 per month you can get all the major news stories for up to 500 companies. You download the price data and news as often as you want. The value lies in the numerous ways it allows you to manipulate the information. You can track portfolios. It gives you graphs and charts and calculations of your investment returns. You can do lot reports. You can do most any chart or graph imaginable. At tax time it presents your transactions in the format the IRS likes. I can read the news headlines and stories on all 400 or so biotech stocks that I follow in less than an hour every day. The data are not unique by any means. Its weaknesses in the present release are the absence of the ability to track options and short sales. But it offers the most cost-effective way I know of to manage the information explosion. Alpha-Beta's next product, after betafectin, will probably be a rapid fungal diagnostic. But this will not be a blockbuster revenue source. The acquisition of MycoTox, and the development of a rapid fungal diagnostic test is a great strategic move. In 1996 Pfizer sold $910 million of diflucan. The antifungal market also includes itraconazole, ketoconazole and terbinafine. In a few years we will have major problems with multiple drug-resistant fungal infections because of the shameless outrageous promotion and use of antifungal durgs today (for asymptomatic toenail infections! Give me a break.) At present there is no rapid diagnostic test that is clinically reliable for fungal infections. Blood cultures, the gold standard, take weeks to become positive because fungi grow so slowly. The present Candida blood antigen test lacks sufficient accuracy to direct clinical care. That is why a clinical entity called "fever of unknown origin" (FUO) exists. It is fevers in patients with bacterial cultures showing the absence of bacterial infections. A lot of them have fungal infections. At present we treat all of them with antifungals, to play it safe. I think this entity is going to disappear in a few years because several companies are working on a reliable diagnostic. This may be part of the reason that Nexstar's stock has declined following the FDA approval of Ambisome for the indication of treating FUO's. It is approved for a market that is going to disappear. There was quite a bit of discussion at Alpha-Beta's breakout session in May at the Alex Brown Health Care Conference about the Mycotox acquisition. In order for Alpha-Beta to develop better antifungal drugs (which are less likely to allow resistance to occur) and to assess betafectin's ability to augment the present antifungal drugs, they need a reliable means to measure exactly how much fungus is present in infected patients or animals. Thus the acquisition. Because the payoff is years away, this did not impact the stock price. Betafectin has many uses that together support a market cap in the billions. In the Hambrecht and Quest 12/23/96 Life Science Industry report Alpha Beta was listed as a strong buy. It was on A. Rachel Leheny's short list of companies that could product a triple digit return in 1997. The stock was priced at $11 at the time. The antifungal program just adds diagnostics and therapeutics in an additional multibillion dollar market to the above valuation. TDD

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