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Strategies & Market Trends : Roger's 1997 Short Picks
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To: Bob Trocchi who wrote (7014)11/14/1997 7:49:00 PM
From: Ben Graham  Read Replies (2) of 9285
 
The following is my analysis of BIOTIME(BTIM)

Hextend would be a direct replacement for Abbott's Hespan plasma extender. Hespan was originally developed and sold by Dupont. Rights were subsequently licensed or sold to Abbott probably because it fit Abbott's distribution system better(sells many other types of intravenous solutions). I estimate that Hespan has perhaps $100m in sales and generates perhaps $20m in profits.

Let's assume that Hextend proves superior to Hespan(any advantages of Hextend are likely to be small)and that Abbott decides to sell Hextend rather than Hespan. I estimate Abbott would be willing to pay no more than 5m per year in royalities. Let's say this is worth an annuity value of 60m or about $7 per share.

I think that the above is supported by the fact that Abbott has paid only 1.4m for an "option" to license Hextend. Abbott is just protecting their flank on this one.

BTIM seems to have little else in the way of product development. I estimate BTIM is worth at most $10/share if Hextend is successful and $3/share if it is not.

I am currently short BTIM but will keep a close stop. Over the next six months I expect it will be a leveraged play on the market: in a bear market this turkey will tank, but in a rally the fund managers will likely jump on this and every other junk "tech" stock with a slick story.
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