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Biotech / Medical : ACMI - Accumed Inc.
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To: Sigmund who wrote (1146)1/15/1998 11:08:00 AM
From: Frank Buck  Read Replies (1) of 1894
 
Sigmund,

Sounds to me like AccuMed has cut away 50% of the <fat>-(R&D cost) sold half of it, there-by increasing needed net-asset value, (with-out dilution) and kept the core (muscle) of the current revenue producing side of the business.

That fat-sell-off equates to retaining 50% of the future expected revenues from that currently non-revenue producing "hole in the pocket". But b/c of the synergies of the newly created venture, the expected future revenue from the newly created R&D products (being developed) should be higher and therefore recompensate (future-value) for the initial low price (present-value).

If one is to believe that the expected future revenue capabilities of NewCo are to be inherently larger then if AccuMed went it alone, the deal is reasonably valued. The no dilution aspect and the increase in
present net-value (present value) account for something. This also takes the guesswork (reduces by half) how AccuMed was going to finance the current activities of their ongoing R&D and still become profitable this year.

I do believe the analysts will like it! Unfortunately they won't be able to provide an "initial strong-buy" as we have that from them in spades. They can however, "reiterate" a strong-buy, for what it is worth. My concern is how is this going to affect the existing Leica relationship.

Frank

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