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Biotech / Medical : Biotech Holdings

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To: tommysdad who wrote (85)	12/10/1997 12:16:00 AM
From: Mike Heimbuch	Read Replies (2) of 224

Hello Tommysdad You bring up very good points - the very same ones that many folks who look at Biotech Holdings have in common. I will try to address them from a layman researcher's point of view - albeit I admit to looking for the best face to put on them!! The structure of DIAB II is going to remain a mystery to us at least until the president - Bob Rieveley - pushes the pending patents to finalization - maybe longer. The company story is that large strides have been made in computer analyzation and modeling in recent years that enable the creation of closely related compounds which might compete for the same market. To avoid that possibility and to lay as much groundwork as they can for future marketing - they are laying back on finalizing patents. This is particularly so IMO because the company is focused on bringing the drug on line with minimal expenditures - and to their credit - as the result of non-related revenues they are very close to operating in the black without any DIAB sales in China or elsewhere. They were not able to secure promises from major pharmaceuticals which would prohibit this type of analyzing so they have opted out of a couple different negotiations which would have furthered the company at perhaps too great a future cost. The major pharmaceutical co. they are negotiating with to step up China sales has agreed in principle not to pursue that tactic - thus they are proceeding with negotiations for China only. I suspect that the China testing - albeit seemingly good enough for that country - was not sufficient to warrant an all out effort by majors to partner up - thus there are probably a few questions remaining on the science side. The simple and correct deduction by investors and scientists - is that there is not enough info available to make a non-speculative judgement on the viability of DIAB II. From a different angle however, looking at the actions of the company, one sees a different picture. The company has never focused on the promotion of their stock in and of itself - although they admittedly are considering a reverse split to bring the price up to warrant a full NASDAQ listing. They have no seriously heavy debt - and their entire efforts are focused on bringing the drug on-line and expanding countries of distribution - and not looking for a buyout. They have a serious phase III trial which is in the enrollment stage at present - and slated for washout in January - with full testing beginning shortly after. The study is in a 3rd world country - I guess - in the Caribbean - I believe the U. of West Indies. Although the investment community would like to see it up north - the reality is that there are significant marketing opportunities in Latin and South America. The company also believes that this incremental approach may be a decent tactic to bring revenue growth without incurring the tremendous debt load which has accompanied N. American drug development. Their goal is a peer-revieweable study to be published in a recognized journal. To that end they have on staff - and as a board member - an internationally recognized and acclaimed doctor whose familiarity with testing and approvals is top notch. He is excited but pragmatic about the coming testing - and feels that the drug will in fact be very useful if not spectular as the company has in the past promoted it. Truth is - we only know the China results - and we only know them from the company. At the same time - animal testing is supposedly slated for this winter - as an adjunct to the China J/V I mentioned above. I am sure that this news - as well as any other significant events will be put out in some journal. The chinese sales to date - from marketing, packaging, and revenue collecting standpoints - is very unspectacular. They do not break out the non DIAB revenues in their quarterly - but the company says that sales revenue is growing. I doubt that they are matching their costs of sales - but they are trying another approach that utilizes the grape vine / pyramid technique - which begins with convincing very respected Chinese doctors about the drug's efficiency. The company does not seem sophisticated about marketing - and they certainly are not putting the cart before the horse by raising debt dollars for an all out Chinese blitz. There are mistakes they have made - and will probably continue to make some as they learn the ropes. Perhaps the projected N. American pharmaceutical partner will make a difference. As to the proposed mechanism of action - I know only the layman version which is at their web site. In short - although I bought in at over double the current price - I continue to think that it is only my timing which was wrong. The company info dissemination runs to the paranoid side - but I guess the president believes like the Oracle head man - that only the paranoid survive. The down side - even if the drug is successful - is that the company is a one trick pony at this point with small capitalization. The bright spot is that their fiscal approach coupled with their marketing groundwork has them in an excellent spot to capitalize on DIAB II should phase III once again prove itself as it did in China. Even as the emminent Dr. Leon Gaucci who is heading phase III says - "DIAB II does not exist in the minds of the medical/science community as yet". I continue to remain drawn to the company's activities as the single biggest factor in maintaining my confidence. regards - sorry for the long chapter MH

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