David,
You said: "Wrong! The royalty payments are more than net earnings."
My comment: From Quidel's 6 February 1998 quarterly report, net income totaled $1,704,000 or $0.07 per share; royalty expense and patent licenses totaled $565,000.
You said: "That means that their eps could be more than double what they are now if they could get rid of the royalties, as I think they eventually will."
My comment: $565,000/24M Shares = $0.024. An additional $0.024 would not have doubled Quidel's earnings. Quidel pays Becton a royalty at the rate of 5-1/4% of the net sales on products utilizing its lateral flow technology.
You said: "Yes, they need to come out with new products, and as they do, I expect some will replace the royalty ones for pregnancy, strep and h-pylori."
My comment: Some new products will, some won't require royalty payments. The following is from Quidel's annual report for fiscal year ended 31 March 1997:
Quidel is currently developing several new products including an influenza A and B diagnostic test, a male Chlamydia test, additional one-step allergy screens, and a QuickVue(R) Fecal Hemoglobin Test.
During fiscal 1996, Quidel entered into an agreement with Glaxo to develop an influenza A and B diagnostic.
In February 1996, Quidel entered into a development agreement with Heska Corporation to develop and supply certain rapid in-clinic veterinary diagnostic tests.
In November 1996, Quidel entered into a multi-year development and supply agreement with Bayer Corporation's Business Group Diagnostics to develop immunodiagnostic tests for use with Bayer's CLINITEK(R) analyzers.
And from its 6 October press release: Quidel and Glaxo signed a second multi-year/multi-million dollar collaborative agreement for the development of two rapid point-of-care diagnostic tests to detect genital herpes. quidel.com
Mike |
