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Biotech / Medical : Trickle Portfolio -- Ignore unavailable to you. Want to Upgrade?

To: tuck who wrote (640)	5/18/2001 6:24:18 PM
From: tuck	Read Replies (1) \| Respond to of 1784

Managed to finish my expiration week/summer hedging duties early this morning, so I listened to PBSC's 1st & 4th Q conference calls, as well as their recent webcast from a healthcare conference (all archived at their website). Notes . . . Lowered yearly guidance by a penny due to one month delay in closing Canberra sale. Seeing no slowdown in demand for products. Mostly hurt by GSI Lumonics issues. GSI got munched by PBSC last year. DD found that GSI array scanners had a defect in the stage mechanism that caused reproducibility problems. It required a redesign. Service reps are now helping install the fixes. GSI didn't have a service infrastructure; PBSC does, and it hopes its response to this quality issue will help it retain some of the disgruntled customers. They see continued weakness from this problem through the next q, then its behind them, and they still expect to hit 15% revenue growth this year per previous guidance. While GSI and also AFFX disappointed here, Axon, with a simple, inexpensive, but reliable scanner, has been the strongest in this space recently. With QC issues resolving for GSI products, PBSC may be able to take some share back. Their liquid handling/sample prep business is growing rapidly, ~40%, fueled in part by OEM agreement to supply front end stuff for WAT systems. They are in talks with other MS manufacturers for similar systems. Instrument sales in general growing at ~35%. Legacy products are radioisotope products. This business is growing at -5% and currently stands at 30% of sales. In four years, PBSC expects this to stabilize at 10% of sales, as some radioisotopic work will still be done. Fusion plate reading systems selling well, with AlphaScreen technology (applicable to70% of all assays done) being sold with half of them. They have just launched the SpryBot line (AGNT) for nucleic acid analysis (must see how this stacks up against QGENF's offerings), new multiprobe liquid handling product, biochip analyzer. Five more launches expected, including new AlphaScreen GPCR assay kit, new Fusion module (FT), and a new spot arrayer. New Asian office has landed a 3 million biochip order and is in talks for more of similar size. See this biz growing at 50%. All reps trained there. Projected 5 yr growth rates of PBSC's various segments: readers, 40%; liquid handling/sample prep, 45%; drug discovery (assays) & reagents (BioSignals division), 25%; microarrays, 30%; service, 5 - 10%; and radioisotopic products -5%. I think PBSC is bottoming here. The GSI issues are steadily fading, and their core business looks good. Few insiders have sold at these (or any) levels. 2nd half ought to be strong, but near term issues have better visibility, and that's what's been priced in. Trickle is comfortable holding it, seeing no cash flow/dilution issues (indeed PBSC is buying back GSI employee options to keep dilution down, not something a cash-strapped company would do), and would consider buying more if it gets any weaker without fundamental change. This is the last of the conference calls, and leaves unchanged Trickle's take that most of the trickle businesses are doing fine, so buy those fairly valued trickle stocks that are executing. Few have experienced the recovery I've seen from comparable therepeutics companies. Last year, we also saw the trickle companies hold up well in the summer, while the even more volatile therapeutic companies gave a lot back. Will we see that again? Cheers, Tuck