Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : IGEN International -- Ignore unavailable to you. Want to Upgrade?

To: Renee who wrote (501)	7/26/1999 4:22:00 AM
From: jpbrody	Read Replies (2) \| Respond to of 1025

Renee are you (or anyone) still following IGEN? I just spent some time looking into it (I hadn't looked closely in a while) and upped my position. I'm more convinced then ever that IGEN will sell off their diagnostics business to Roche as part of a settlement. This is based on hearing the CEO (Wohlstader) repeatedly saying in the past that the diagnostics business is not a place to be unless you are #1 or #2 (roche or abbott). The recent split of IGEN into three divisions (life science, medical, and industrial) seems to set the stage. Here's my effort to put a price on the medical division. The price to buy out the current contract would be 40x annual royalties or about $400 million ($25/share). (I base this on the fact that Roche could pay this one-time fee and then immediately increase their annual earning by the amount of these royalties. I believe they currently trade at a P/E of about 40, so this is a fair price.) This is based on the REPORTED royalties of $10 million last year. If the rumors of underpayment by a substantial amount (factor of 2 or 3) are true, then this number would have to be revised upward. In addition, I expect that Roche would want to acquire rights to the point of care and physician office laboratory uses of the technology (which courts have ruled they clearly do not have). I guess the POC to be worth about $100 million (based on point of care company called iSTAT which is a little further along) although I am open to correction here. My knowledge of IGEN's POC is minimal. So my minimum estimate for the buyout price of the medical division is $500 million or about $30/share. This could be as high as $1.2 billion ($72/share) if the royalties are being underpaid. One other thing I noted. The $30 million in debt they placed with John Hancock in March was secured with the royalties from Roche. Jim