bbi diagnostics ipo, page-8

I would be very surprised to see ADO get a slice of the BBI IPO (they really do have to get a huge dollop of capital to pay down Alere's debts or face a shareholder revolt), I suspect ADO would have to buy in and the only way they could afford to is with an equity swap or raising of some kind - unless that is why Ferghana are involved. Although I think it much more likely that Ferghana are acting in an advisory role or with another party - perhaps a synergetic acquisition to accelerate the development and sales of our in house products? Pure speculation on my part.

Although it sounds like communications with the company indicate a longer delay until BBI or POC1 sign substantial deals (or at least not on GC's current trip to Europe), one has to wonder why Geoff felt it necessary to be in Europe and for a prolonged period, unless it was to emphasise the seriousness of ADO's dealings with POC1 whilst our scientists ramp up their involvement. It feels as though POC1 walking away at this stage would be madness on their part, and if you were in their shoes witnessing the progress that ADO have made and in such a short time frame after Biomerieaux failed (with bigger profile and resources) surely you'd be tempted to sign them up as a development partner?

One possibility I've considered, especially given GC's comments about 'component manufacturer' rather than royalty clipper, is that we might get aboard to partner the entire mini care range and develop the product, this would entail risk sharing and also require significant capital raising on ADO's part to fund our share of the work/production costs, but equally would lead to far larger revenues flowing our way whilst leveraging off POC1's huge market presence and global sales force - this could be a very interesting if riskier path to follow.

On the BBI front, my prior post alluded to the fact that if we get aboard with BBI then the new entity will be able to quickly adopt M&G across their ranges, I suspect the new entity that would be created would have revenues far higher than those quoted in the newswires, unfortunately given that SPD, Axis-Shield and the rest have been in house with Alere for so long there's no way to get hold of the numbers. I speculate given the size of the acquisition of Axis-Shield and the price that P&G paid to get 50% of SPD that BBI might even double their revenue/profit.

I also wonder how BBI comes to it's revenue/profit figures is it truly run as a stand alone business, charging Alere the same as any other company? I suspect not, you'd think they'd charge Alere cost price, what happens after the float is intriguing as Alere won't do anything to increase their costs, and may have to structure their relationship with BBI carefully. You'd also think that if BBI starts to use M&G in several/all products that Alere would also want to rapidly exploit them too, so a vote of confidence at BBI will quickly spread to the controlling company too. If the IPO is causing delays but leads to a more rapid proliferation of cooperation then it's worth the wait.

I'm also unsure of how the internal structures of the diagnostics industry work, it seems a very incestuous and interwoven place, but surely BBI/Alere are worried about a potential Philips link up? Minicare will inevitably lead to high quality products competing in the same market place and the best way to prevent that is exclusivity - I can understand the distraction and importance of the IPO but if it means they miss exclusive access to M&G by POC1 beating them to the punch then it could be a very false economy?

The wildcard here could be that Geoff's trip is nothing to do with BBI or POC1 and that he's happy that current collaborations with our scientists working in their labs are enough to do the talking - Might he be at Roche, Merck or another big company shaping a significant collaboration in bioseperations or similar, only time will tell, but there's no doubt that it's an exciting time to be a holder of ADO!!