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

To: David Wise who wrote (1402)	2/19/1998 5:03:00 AM
From: Mike Relyea	Read Replies (2) \| Respond to of 1693

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

To: David Wise who wrote (1402)	2/19/1998 8:41:00 AM
From: Robert Busse	Read Replies (1) \| Respond to of 1693

David, I think you are correct that the royalty payments have hurt Qdel earnings fairly substantially, although I don't think their earning would had doubled without such royalty payments - anyway, your point is well taken that the royalty payments were a substantial detriment to earnings. However, what the Lord taketh away, the Lord also giveth - see my post #1393 re the effect of the NOL carryforward on 4th qtr earnings- this will be much more substantial than the street is anticipating I suspect- presuming Qdel has a decent qtr (and I'm personally expecting their biggest qtr ever) the NOL will not just add a penny or 2 to earnings - it could be as much as a dime or better - some may argue these earnings are "illusory" in the sense that they don't result from a huge increase in revenues and/or sales - however, I think the street tends to focus on earnings surprises and "the bottom line" - I can't help but think a large increase in reported eps will have a very positive and fairly substantial effect on the price of the stock. We'll see. BOB