This is it. Main point is ADM settlement of 100 million.
To: scott bradley (23 )
From: Rob D.
Thursday, May 28 1998 10:09AM ET
Reply # of 27
The Undervalue dog just put this one out
******Undervalued Dog******, Volume 3, No. 20, May 28, 1998
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Part I: New Pick IGNE
IGENE Biotechnology (OTC BB: IGNE)
Recent Price: $0.15/share
Daily Average Volume: 92 K
97 EPS: -$0.10/share (loss)
Estimated 1998 EPS:$0.25/share
Estimated 1998 PE: 0.60
Div/Shr: None
Yield: None
52-week Range: $0.06-0.27/share
Outstanding Shares: 19.2 M
Floating Shares: 1.90 M
Market Cap: 1.92 M
1997 revenues: $0.14 M
Estimated 1998 revenues: $10 M
Profit margin: 50%
SEC failings: Yes
Insider Buying: Yes
BUSINESS SUMMARY AND CORPORATION BACKGROUND: IGENE Biotechnology, Inc. ("The
Company") is engaged in the business of industrial microbiology and related biotechnologies. The Company
was formed on October 27, 1981 to develop, produce and market value-added specialty biochemical
products derived from abundant, inexpensive and renewable
agricultural residues and wastes through the use of state-of-the-art fermentation technology, physical and
chemical separation technology, and related chemical and biochemical engineering technologies.
The Company has two patented commercial products. AstaXin(r) is the Company's tradename for its dried
yeast product made from a proprietary microorganism developed by the Company. AstaXin(r) is a natural
source of astaxanthin, a pigment which imparts the characteristic red color to the flesh of salmon, trout, and
prawns. In the ocean, salmon and trout obtain astaxanthin from krill and other planktonic crustaceans in their
diet. A crustacean diet would be prohibitively expensive for farm raised salmonids; without the addition of
astaxanthin, the flesh of such fish is a pale, off-white color which is less appealing to consumers expecting
"salmon-colored" fish. Efficacy of AstaXin(r) has been demonstrated by fish feeding trials in Europe, Asia,
and North and South America. An estimated 700,000 metric tons of farm raised salmon are produced
annually worldwide. Based on estimates of worldwide production of farm-bred salmon, the Company
believes the market for AstaXin(r) exc!
eeds $150,000,000 worldwide, which would be approximately 75 metric tons.
ClandoSan(r) is the Company's registered trademark for its natural nematicide made from crab and crawfish
exoskeletons and processed into pellets or granules by patented and patent pending technology developed
by the Company. The product acts in soils as a biological control agent by stimulating the growth of normal
soil microorganisms, which produce chitinase, and other enzymes that degrade chitin present in the cuticles
and eggs of plant-pathogenic nematodes. It has secondary effects as a slow release organic fertilizer.
ClandoSan(r) does not have a direct adverse effect on plant-pathogenic nematodes either in vitro or in
sterilized or irradiated soils and only acts indirectly to suppress nematode populations in soils. The product
generally is not water-soluble and, consequently, does not contribute to ground water contamination.
On March 17, 1988, ClandoSan(r) was registered by the EPA for use with all agricultural and horticultural
crops in accordance with the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA") section
3(c)(5). ClandoSan(r) is now registered in 49 states and is produced at one contract manufacturing facility in
the United States.
RECENT DEVELOPMENTS AND ANALYSIS: In 1995 the Company signed a nonexclusive licensing
agreement with Archer Daniels Midland Company (ADM) for the manufacturing and sale of AstaXin(r)
worldwide. On February 29, 1996, ADM informed IGENE that it would no longer use IGENE's astaxanthin
technology and terminated the licensing agreement. On August 4, 1997, the Company filed a $300,450,000
contract and trade secrets lawsuit in U.S. District court in Baltimore, Maryland against ADM, contending
that ADM stole the Company's formula for making its natural astaxanthin pigment, AstaXin(r). The
Company was also claiming breach of contract, in regards to the licensing agreement entered into by the
Company and ADM in 1995. The Company was contending that it complied with all material terms of this
agreement, including concentration levels of its pigment. On September 10, 1997 the District Court denied
ADM's request for a preliminary injunction on the basis that ADM could not demonstra!
te a likelihood of success on the merits of its case.
Before 1998, IGNE was a development stage company. In March, 1998, IGNE began production of
commercial quantities of its natural astaxanthin product, AstaXin(r), at its contract manufacturing facility in
Mexico. The Company stated that shipments to satisfy existing orders will commence by the end of March.
Since then, the Company has received many orders that are worth about $5 million. It is estimated that the
revenues will top $10 million in 1998 from its production of AstaXin (r). In order to finance massive
manufacturing of AstaXin (r), the Company also raised $5 million from its directors, that will allow IGNE to
finish its transition from a development stage company to a manufacturer.
According to a report from "Small-Cap Investment Center" published yerterday, ADM will settle the lawsuit
in favor of IGNE. Major terms include, but not limited to, that ADM will stop the production of astaxanthin
pigment and IGNE will receive $100 million from ADM for next five years, $20 million a year. This money
should allow IGNE to build up a manufacturing facility for massive production of AstaXin(r). Also, the
company will be able to pay its shareholders some dividend at $0.50/share per year s . Since ADM will no
longer be allowed to produce astaxanthin pigment, IGNE will be a major player in this market worldwide. it
is estimated that revenues will top $100 million in 1999 for the Company.
IGNE shares have been traded very actively since last March. Insiders are buying the shares actively. There
is important technical support in the area of $0.10/share. With these recent developments, IGNE shares are
ready to move up with huge upside potential. The target price for IGNE shares is in a range of $1-2/share in
a short term (1-6 months) and in a range of $3- 4/share in a long term (6-24 months).
Contact:
Stephen Hiu, President
9110 Red Branch Road
Columbia, MD 21045
Tel: (410)997-2599
Fax: (410) 730-0540 |
