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Biotech / Medical : QDEL - Quidel more quick diagnosis -- Ignore unavailable to you. Want to Upgrade?

To: Clarksterh who wrote (1356)	1/25/1998 12:26:00 AM
From: Mike Relyea	Read Replies (1) \| Respond to of 1693

Clark, Thank you for your synopsis and comments on Quidel's conference call. Here are some additional comments: You said: "4) They expect that the newly approved HCG test (a pregnancy test which is more sensitive than current Quidel tests) will increase market share from teens to twenties. This is a $50M market, so you do the math (hint somewhere between $2.5M and $7.5M in additional sales.)" My comment: Assuming $5M, this would add about $0.10 to Quidel's earnings (50%PM X 5M/24M shares), and at a 30P/E, Quidel's valuation would increase $3. You said: "5) They expect to go from 30% market share to 50% market share for the H. Pylori tests - although they gave no reason, so take it with a grain of salt." My comment: Mr. Frankel said he expected H. pylori sales to increase 60% to 75% over last year. He also said Quidel and P&G would capitalize on the recent CDC campaign to educate patients and physicians about H. pylori. Considering that approximately 5M people in the U.S. develop ulcers a year, the H. pylori test market is potentially very large. 5M tests X $10 per test = $50M. And the number of tests performed could become substantially greater as doctors begin to screen patients for H. pylori when they complain of gastritis. I don't know Quidel's current H. pylori sales, but they're no where near 50M, so Quidel's got a lot of sales potential here. And remember, no royalties are paid to BD for this product. You said: "6) The influenza test is expected to start sales at the same time as the Glaxo product, and that is expected to be 18 months from now." My comment: I think the market's missing a big one here, and it hasn't even included one cent in value for anticipated earnings for this potentially blockbuster product. Mr. Frankel stated that pre-clinical field evaluations for the test were completed last December and that clinicals will begin at the end of this flu season. He said the test is a five-minute POC test which Quidel will seek a CLIA waiver for. Well, the fact that Quidel will begin clinical testing indicates to me that Quidel has successfully developed the test and all that remains is completing the requirements for FDA submission. I think Quidel's going to give us an earnings surprise for the forth quarter, and I see no reason to think the current forecast of $0.32 for FY99 won't be met. And if it is, Quidel's at least a $9 stock base on earning looking one year out ($0.32 X 30 P/E). When the market begins factoring in anticipated revenues from the influenza test, and the undervalued biotechnology sector as a whole catches Wall Street's attention, Quidel's price should increase substantially. At today's price, Quidel's reward/risk ratio appears very high to me. Mike