Just a quick update on what I consider to be the key developments for Anteo Diagnostics following their Quarterly Activities report to the market on 30th April for business between January 1st to March 31st 2014.
Firstly before discussing operational activities the current cash position of the company is $8m and current burn rate after government grants and R&D grants is around $1.5m pa - A very low annual burn rate and one of the things I like about how the company has been run.
Below I will list some quotes from the quarterly and my thoughts :
"An interim report on the work undertaken to date was provided to BBI and we have subsequently received confirmation of their desire to progress to the next stage of the project."
This is a MAJOR statement towards future success for Anteo as a company as has been discussed this deal once formally commercially binding will be worth in estimates by CEO Dr Geoff Cumming "in excess of $10m pa". BBI Solutions is a subsidiary of the Alere group who are the global leader in Lateral Flow rapid tests. Alere's sales in lateral flow assays are in excess of $2billion pa. Alere have also recently indicated they are going to IPO the BBI business on the London stock exchange and plan to sell 25% of the company in order to reduce debt inside the Alere operations. BBI Solutions manufacture the Gold Nanoparticles used in all of Alere's lateral flow tests and this is where Anteo's coating surface technology Mixngo can be used.
One other piece of VERY important information from the Quarterly regarding BBI/ALERE was the following :
We entered into a paid 5-phase study with BBI that was targeted for completion in the
second half of this year. The first two phases were to be largely undertaken at the Anteo
facility. The key objectives of the first two phases were completed on time and with results
that were better than expected. The work undertaken covered a range of activities from
activation of particles with Mix&Go, binding antibodies to activated particles to improving
stability of particles and streamlining the manufacturing process. We were supplied with a
range of highly optimised antibodies that BBI routinely use when assessing new
technologies. To our delight and their surprise we improved sensitivities between 3 and 5
fold and believe that further improvements are possible with additional optimisation.
Increases in sensitivity may not have great commercial value for the antibodies tested but if
similar improvements are achieved with other antibodies then the commercial ramifications
are likely to be significant. Where increased sensitivity is not a benefit then less antibody can
be used, reducing the Cost of Goods Sold. Sensitivities we achieved on the lateral flow tests
rivalled those that are achieved, for the antibodies tested, in laboratory-based test. Since we submitted our report to BBI they have undergone some internal restructuring and
reassessment of priorities. Recently, we were informed of their decision to proceed to the
final phases of the project, including scale-up, outlined in the Heads of Terms. Their
management expressed satisfaction with the progress made on the project to date and high
expectations for the outcome of the collaboration into the future.
This statement above highlighted in bold is VERY important - The fact that BBI are moving to scale up to me means that Mixngo is being incorporated into BBI's production line prior to product launch. See below quote from previous quarterly report from mid 2013 :
The key point here from above is that the FINAL scale up exercise is to incorporate Mixngo into their manufacturing process. This is part of the Heads of Terms agreement but in my opinion is providing investors an opportunity prior to a formally binding commercial agreement. BBI's Gold nanoparticles are used in over 400 million tests pa. Below photo from BBI website :
To summarize on the BBI/ALERE work - This is one of the top commercial interactions Anteo are currently working with - They anticipate launching a "Next Generation" lateral flow platform in the second half of 2014 and it looks highly likely that Anteo will be successful in being incorporated into their production line and then receive royalties on sales in these lateral flow tests. Depending on royalty rates this deal could be worth to Anteo anywhere from $10m - $30m over time also exclusivity could be sought in the lateral flow market to provide a competitive advantage.
POINT OF CARE COMPANY 1
The company Anteo signed a feasibility study with in March 2013 has been speculated to be Philips Healthcare working on the launch of the handheld diagnostic point of care device called "Minicare" this device is first targeting critical care testing in the form of a Troponin assay to determine if a patient has suffered any damage to the heart muscle in the form of Myocardial Infarction.
Below are quotes regarding this interaction from the quarterly report :
"The technical requirements for the PoC 1 project have now been completed at Anteo and the performance of the resultant activated particles on clinical samples is being tested in their facility."
"An advanced stage of commercial discussions has now been reached with PoC 1."
The technical work on this project that was undertaken at Anteo was largely complete by the
end of March.
In October 2013 our client undertook a significant study using clinical samples to investigate
the performance of Mix&Go and to compare its performance with that achieved
conventionally. The results for Mix&Go were approaching those necessary for commercial
success. Since then a smaller study to assess progress using Mix&Go with clinical samples
was undertaken with a performance outcome approaching twice that achieved in October.
Refinements made since then through to the end of March are expected to deliver a range of
test performance levels that are comparable to many laboratory-based tests.
In early April activated particles, produced utilising what we consider to be our best (current)
approach, were sent for testing using the full panel of clinical samples held by our partner.
Results of this study are expected in the near future. A series of further tests have been jointly developed and will be undertaken, commencing early May, when several Anteo scientists will be working with the PoC 1 team in their laboratories.
Concurrently we have been discussing the likely parameters that would be covered by any
commercial interaction that results from these studies. There is a basic understanding on the
high level terms but the details remain dependant upon the outcome of the present analysis.
Thoughts on this interaction :
Main points of significant notice here are that all the technical work has been completed and work is now to take place in their labs overseas. Results are being compared to "Laboratory based tests" this is massive - The fact that data can be generated by a point of care device away from a testing laboratory opens a massive market of accurate and cheap diagnostics - Think about for example a handheld device in every ambulance globally so hospital waiting rooms are no longer full of people who have chest pain and are unsure if they have heart problems or just bad indigestion!
Anteo scientists are also scheduled to visit their labs in early May for a series of "Jointly Developed" tests. Again this partnership sounds like it is steaming ahead nicely.
The other major point I see here is that "HIGH LEVEL TERMS" are agreed on - This tells me a commercial signing and perhaps a final naming of the mystery company POC1 will finally come out very soon.
This deal again has been quoted as an estimate of being worth "In excess of $10m pa"
APPOINTMENT OF ADVISOR
Another piece of significant news was the following :
"In recent times, perhaps as a result of our increased market capitalisation, we have been presented with a range of commercial opportunities to assess. We have appointed a very well-credentialed New York based group, Ferghana Partners, to assess the merits of these opportunities and thereby allow us to retain our focus on ensuring the commercial success of our core technology."
I think this is another sign that the company is moving from a speculative investment to one with near term cash flow opportunities and this hasn't gone unnoticed.
There are many ways to speculate on the above information - I will leave it as a positive that there is obvious interest from outside parties in the Mixngo technology and potential commercial fruitful opportunities for Anteo. Anteo have smartly outsourced this work to the advisors so they can focus on what they do best.
Another great lead indicator for any company moving from R&D towards a cashflow generating profitable company is the calibre of the staff they are attracting and what the background of those new staff members are. I also like the staff incentives Anteo employs by issuing long dated options for these employees so they can in the future benefit from their own great work and developments over the years by sharing in the profits of the company as a shareholder. Numbers wise there has also been a big ramp up in new staff since November last year.
See below a few of the new staff members and where they have previously worked. Perhaps you should ask yourself why they are positioning themselves with a small Aussie biotech in Australia.
Dr Jozef Hodyl, an inorganic chemist, joined us at the beginning of the year. Since joining he
has developed in excess of 20 novel Mix&Go formulations all of which have been designed
to address either issues that have been raised by companies that haven’t been successfully
addressed using conventional technologies or specific issues that we have identified and
believe have commercial value.
Michael Carroll has joined us as a Production Scientist after 9 years at Alere where he held
a similar position. Michael will work in our Production and Quality Control Group. This team
will be responsible for the manufacture of products for sale but will also manufacture
materials and reagents for internal use.
Dr Catriona (Cat) McElnea after 12 years at Alere joined our R&D group bringing a wealth of
immunoassay experience across a range of diverse formats. Specialising in planar
applications, Cat will work on microtitre plates, biosensors and microarrays amongst other
"I have endeavoured to provide some detail around our key current activities. In other areas
we are engaged with a major European IVD company and have been requested to send
materials, with protocols, for them to assess in three problematic projects one of which
requires conjugation of biological material to glass. Another European based supplier of
OEM consumables to the IVD industry has found that Mix&Go appears to improve outcomes
on their novel synthetic materials. Further testing is being planned."
This is just a general update of the quarterly report - I suggest reading back through the last few years reports to see if you believe they are following and progressing towards their long term business goals. I believe they are and currently Anteo are right in the delivery zone. Current share price of 19 cents and a market cap of around $157m - My personal estimates are to see this conservatively double by the end of this calendar year which would be a minimum price of around 35 cents. I am a long term investor in this company as I believe these near term big deals are only the beginning for Anteo as the platform they have is totally unique and globally scalable to not only the diagnostics market but many other markets (See my previous blog post on Nanoparticle Applications)
Disclosure : The author holds shares in this company. This research is not a recommendation to buy or sell shares in this company. The author may at any time buy or sell shares without notice. Please do your own research