ado research, major re rate on the way, page-35

hi geezer with regards to your qns,

"guys this is great to see the move up but is up too much before news is out?? My concern is now that it will be sell on news the way its going?? Surely it wont go to 15c next time news is out??? especially with the option conversion?? Thoughts"

it really depends on which company signs up with ADO next as well as what are the shareholders' expectations. whether your a longer termer, med term or short term holder?

its interesting to note how much sp has gone this time round. prolly up ~90% in 2months or from 4.5c to 8.4c.
the last time before the merck ann (14july) sp went from prolly ~4.5c - 6.8c.

imo, this shows that it's not just leaky news that caused the appreciation in sp this time round but due to more ppl knowing about this stock and its potential, this increased awareness as well as leaky news. do take into acct that in a months time we will know how much royalties is made this qtr too.

if you missed one of my earlier post about scenarios and expectations: there can be alot of scenarios and the following are all my interpretation/expectation as a SH of ADO.

scenario 1:
another bead manufacturer - ie dynal. imo, if dynal signs up, i reckon ADO (with dynal, merck and bangs) is assured of that 5-10mil pa target in time to come.

news of dynal coming onboard might be dissapointing for some short termers and sp might retrace, but longer termers or new SH will look to it as a buying opportunity.

imo, bead manufacturers are like the phase I of a project, it is easier to get things sorted with testing (ie lesser time to commit). n in time IVDs majors will come onboard and those who can wait will be handsomely rewarded




scenario 2 (the time has already elapsed and the IVDs have finally finished with their testing).

Ivd coy (ie Roche, et al) coming onboard. SP will re rate significantly with ann such as Roche, Sp will prolly shoot thru 15c. jumps in excess of 100% with these sort of news for days as traders/others jump/buy in, imo.

why? its validated in another market where the potential is >$50mil pa (>10times earnings from beads)

besides the $$, securing an agreement with Roche will be like farming out the project to BHP. then RIO will be anxious to get in and others, there's the cascading effect.





todays VWAP - 8.51c last close sp - 8.4

Mkt Cap (fully diluted) - 8.4c x (669mil + 82mil + 8mil + 29.5mil + 0.4mil + 7mil + 14.3mil) = 8.4 x 810.2mil = $68mil

options
82mil - 6.5c (2011)
8mil - 2c (2012)
29.5mil - 7c (2014)
0.4mil - ~55c (2011)
7mil - 15.6c(2013/14)
14.3mil - 5.5c (2011)

assuming all the 2011 options were converted except those at 55c. cash recieved = 6.5 x 82mil + 14.3mil x 5.5 = $6.1mil

as noted in an earlier post, ADO chairman hold half of these options. requried $2-3mil to convert them.


current cash in hand = 2.3 - 0.8 (this qtr burn) = 1.5mil

total cash = $7.6mil by feb (v likely).

with revenue coming in, ADO might not need to CR for a long long time. (cash burn 2.4mil a year, even without revenue, ADO has got enuff to last 3years).