The daily NON trading activities since the share was successfully capped to this low level could not be more frustrating to watch. In times like this referring back to the fundamentals stated in the announcements seem the best way to stay focused and keep emotions out of the equation.
Interestingly market entirely ignores the scope of what the wording "Strategic Alliance" means in the business world.
Here an example, purposely chosen out of an entirely different market sector, but the dimensions of a Strategic Alliance LOI are the same throughout the industries.
2 Chinese construction companies signed a Strategic Alliance LOI in Nov this year.
Here an extract from these news : As part of the agreement, the two companies agreed to cooperate strategically in international and national markets, support each other and share resources so as to increase their competitiveness in the world construction market.
China ACM will also collaborate with and support CSCEC in the preparation of bids and proposals, provide access to its intellectual property and share capital resources to reduce capital requirements and increase cash flow.
The sharing of capital resource is a common trait of Strategic Alliances, as mentioned as well in the Alliance above. Keep in mind that these companies also signed " only " the LOI, which is the letter of intent, with the consequence of shared intellectual properties and capital resources.
When projected onto our business model, these news back in Sept were not digested by the market properly. Our shareprice should have doubled on the heels of that ann. It did not. A month later the GSK news for the FIM development hit which should have doubled share price once again ( particularly when keeping in mind that the FIM applications will be fast tracked towards producton with limited regulatory hurdles as they target OTC products ).
Going back to the biotech industry, here a good, not recent, but very informative and still accurate article about forming Strategic Alliances within the sector between larger pharma companies ( this is concerning FMCGs just as much ) and smaller developing biotechs.
The first sentence already gives a good insight : Strategic alliances are less costly and less risky ways to acquire capabilities than outright acquisitions.
Market entirely ignores the meaning of our Strategic Alliance and the consequences onto our future share price.
Another potential stumbling block is the vastly different time frames on which the partners operate. Biotech executives live with the constant need to raise cash, while cash-laden giant pharmaceuticals can afford a more deliberate pace. Still, if Mr. Fisher is right, the giants have an end-game in mind and will nurture - and finance - their best relationships. When an acquisition finally takes place, the experience of the alliance will have helped to ensure its success.
Strategic Alliances are often precursors for acquisitions or exclusivity rights on certain patents. When Strategic Alliances do work out, the path is often set to acquire in a more direct fashion.
A successful alliance can lead to an acquisition, and many do, but the likelihood of a good marriage is enhanced in these cases by a period of living together
Regardless where this Alliance will lead to, the outlook of such a close relationship with one of our newest partners shows clearly that exclusivity discussions are increasing between partners and OBJ.
The biotech companies are research powerhouses, having successfully lured the best and brightest scientists away from academia for nearly two decades.
Our company is a perfect example which took its first development steps within the pure academic realm and moved into commericalised territory hiring established academics as their directors.
"Very few of the large companies have reconfigured themselves to have teams that can go out and identify value," said Richard Pops, president and chief executive of Alkermes Inc., a biotech company in Cambridge, Mass., that specializes in drug delivery technologies and has partnered with several larger concerns. "You need a team or an individual empowered to go out and make things happen, as opposed to a reactive organization that waits for things to come over the transom and then decides if they suit its core competencies."
Hence the hiring of Dr Kevin Hammond and Dr Matt McIldowie who cover this need for exchange between partners and OBJ on an executive as well as technical level.
A common element to successful strategic alliances, biotech and drug company executives agree, is that they are true collaborations. That means operational managers and scientists from both companies sharing data, experimentation and risks.
This paragraph represents my example about the 2 Chinese construction companies. Strategic Alliances are not contracts from strength to weakness, namely from a giant to a small biotech company, it is an equal relationship as both bring something to the table the other can not provide. The interconnectedness between both companies in a Stategic Alliance is greatly underestimated by market in the moment when it comes to OBJ and its partners.
To pursue multiple strategic alliances while remaining independent, a company needs a broad enabling technology, Dr. Crooke said. That way, it can partner 50/50 on specific projects, the way Isis has joined with Boehringer Ingelheim International G.m.b.H. on inflammatory diseases, while retaining 100 percent ownership of the core technology. Companies with a single product are better candidates for acquisition than alliances, he said.
This perfectly describes OBJ in a nutshell. Our technology has diverse applications of the core technology, enabling management to pursue several exclusive relationships without losing independence.
Indeed, previous generation biotech companies are already going through that transition. Sandoz, which entered a strategic alliance with Genetic Therapy Inc. in 1991, acquired the company in June. Chiron entered a strategic alliance with Viagene Inc. in November 1993, and acquired the company last April. Chiron itself also agreed to sell a 49.9 percent stake to Ciba-Geigy for $2.1 billion, after several years of partnering.
These are good examples of where Stragegic Alliances lead to, eventually. But it seems we are a good way off from that process, against my previous opinion earlier in the year which is not supported by latest developments.
When reflecting on this ONE Strategic Alliance alone ( not even taking in the previous FMCG agreements, GSK developments and agreements and 3M as a partner for manufacturing experties ) it is amazing to watch how consistently market does not value the latest steps taken by management and announcements of partnering progress given.
This leaves me with the conclusion that OBJ will be rerated within a dynamic event ( the longer this is delayed the stronger this correction will be ) to catch up with what should already be a reality, a much higher share price.
OBJ Price at posting:
2.3¢ Sentiment: Buy Disclosure: Held
(20min delay)