summary of the company

Hello everybody,

I started investing here last week and after beginning with some extensive DD i further increased my position.
As i am not a native English speaker,please do forgive me any misspellings or wrong expressions.
First my main investment area is commodities and i am new to biotechnology,so i just have a rudimental understanding of this sector.
But i do have a long lasting experience with shares and after enjoying a very nice run up with MHM (a past and hopefully future multibagger) i was perplexed to realize that this story is quite similar in many ways (of course there are some differences-positive and negative-as well)
A BIG THANK YOU goes to TTC for crosspromoting ;-)

So here is a summary of the company: (the way i understand it)

1.BASIC FACTS

Anteo Diagnostics (ASX: ADO)

Outstanding shares: ~ 669.5 Mio

Marketcap: 33.5 Mio (shareprice of 0.05 AUD)

Options - a little complicated, here are the basics:

~9 Mio exercisable at 0.02 AUD meaning IN THE MONEY
~14 Mio exercisable at 0.055 AUD expiring April 2011
~85 Mio exercisable at 0.065 AUD expiring February 2011 (note that 82 Mio of those are tradeable under ADOO)
~different smaller positions ranging from 0.15-0.62 AUD, so IMO these can be ignored at the moment

Cash:

~2.5-3 Mio AUD

Directors:

James Henderson (Chairman)
Geoffrey Cumming ( CEO) former head of Roche Oceania !
Lara Iacusso
Richard Martin
Robert Gilmore

Top holders: (as of September 24th)

1. Coates Myer 9.8 %
2. First Cape 7.1 %
Top 20: 47 %

Website:

http://www.bio-layer.com/

Last annual report (as of June 30th 2010) published on September 30th:

http://www.asx.com.au/asxpdf/20100930/pdf/31stdl01wdtrzf.pdf

Last presentation (from January 2010):

http://www.bio-layer.com/pdf/EGM%20Presentation%20100122.pdf

Interview with CEO Cumming from the 19.July 2010:

http://www.brr.com.au/event/67012


2.WHY DID I INVEST?

I try to find small companies (=big leverage) that are massively undervalued.As already stated MHM was/is such an example and there are many similarities here:

+ Both companies developped a new technology which is superior to existing technologies (ALNAK-Mix&Go)

+Both technologies already proved that they are working, meaning they are generating revenue

+Both companies are in ?advanced? negotiations to expand their technology on a gloabal scale. It certainly helps/could help that there are established connections to industry giants (Alcoa/Roche)

-the sharestructure looks much better at MHM and directors are more heavily invested

-it is still unclear how much money ADO can generate and if this will be enough to be financially independant

+BUT Anteo has an atrractive valuation at current prices

ADO didnt manage to sell their technology in the past,but that obviously has changed with the start of Geoffrey Cummings as CEO (2009)

3.AREA OF BUSINESS:

Due to my lack of understanding for the details and for simplicity reasons, i try to stick to the basic facts here,which are important for shareholders.Everybody who wants a more detailed picture can have a look at the annual report and/or the last presentation.

ADO is active in the field of diagnostics. (global revenue of 7-8 bn $- growing with 5-6 %/year)
They developed the Mix&Go tech,which helps to save costs and improve the efficiency compared to existing methods.
This can be clearly seen through two licensing agreements which were signed this year.
In January Anteo started working with BANGS, USA for a 3 year period (option to extend for another 3 years.In July they were able to get Merck,Germany (listed in the DAX = Top30 of the country) as a customer. (4 year period)
ADO will get royalties for this cooperations, double digit numbers from BANGS, but i couldnt find a number for the Merck Deal. (have to wait for the next Quarterlys for details)

Both customers just started promoting their products in July, so the revenue/profit just started.

ADO is in discussions (NDAs) with 6 companies out of the Top-10 worlwide,which account for 60% of the total market.Among them such heavyweights as Roche,Switzerland (Nr.1) and Siemens,Germany (Nr.2)
Now remember that our CEO used to work for the Swiss company in the past and make your own conclusions...
ADO is optimistic,that they might be able to reach further agreements in the future.

A valuable arguement that the research report stressed,is that MERCK and BANGS will definately have spent a lot of time on DD before signing any deals!

4.CASH BURNING

was 2.26 Mio AUD the last year, but it has to be noted that 1.75 Mio from this went into research and development with only 0.99 Mio AUD being spent for administrative purposes.
So no money wasting !

5.SHARE ACTIVITIES

If you look at the Chart (see below), you will notice that the share price dived after the MERCK deal,which probably is because of ~144 Mio options which were well in the money at 0.012 AUD expired at the end of September.Needless to say that probably all have been exercised. This fact was (and maybe still is?) a burden for the sp performance, but the downward trend was stopped recently and ADO began a slow upward trend.
Should the sp be above 6.5 cents in the spring of 2011, (and there is reason to believe it will) Anteo will probably be funded for months to come, which should be very positive for existing shareholders (no dilution)



6.CONCLUSION

We do have here a company that is massively undervalued and hasnt shown up on the radar of the mass.
IMO this one has a very good chance to ignite, if management is able to sign new licensing agreements. The Risk/Opportunity factor looks very favourable at the moment.
Just compare the marketcap to estimated future earnings.Even if only a fraction of these earnings can be reached,the sp should respond positively.

All the potential for a MULTIBAGGER. Time will tell.

As always DYOR

Wantedman

ASX: MHM-ADO-MEY-HOR-RRSO-SHD-FML