Trading in ADO since quarterly, page-53

Cashman's figures are obviously based on potential future earnings. This makes sense because people often buy stocks not based on current earnings but expected or potential future earnings.

For example, you wouldn't buy a services company based on their current P/E ratio if you knew that one of their major contracts would not be renewed when it expired in 18 months would you? Of course not, you need to look forward - invest in the future, not in the past.

Bio/pharma companies often trade on high P/E ratios, so using a P/E ratio of 30looks reasonable to me.

The inevitable point of contention is likelihood of achieving those potential future earnings - i.e. signing BBI, POC I and others. On that, I think the odds of success with BBI and POC I have increased given the latest info provided in the quarterly report.

A deal with BBI I would rate as better than even, given they are now proceeding to scale up phase - I would say it is not unreasonable to consider this a near certainty with the caveat that this is based on the big assumption that there are no major issues experienced in the scale up phase (another question you should consider is what are the odds of issues emerging in the scale up phase, and what is the likelihood of this being a deal breaker?)

With the POCI project I initially rated the likelihood of success as low given their reluctance to give us full access to the device. This suggested to me that they were keen on finding their own solution and there is always a chance that they could. Fair enough, who wants to pay royalties if there's a chance they don't have to?

The latest report in the 4C suggests however, that they have not found a solution that cuts the mustard and that this hurdle has now been overcome because ADO have been given access to their biosensor. As a result, I would also say there is a better than even chance this would also lead to another heads of term agreement or commerial deal.

All this of course is just my interpretation of the info the CEO has provided us. There is no exact science or equation you could use to judge the probability of these things, it's just really an educated guess and I accept that everyone will have different views - this is what makes the market.

But to date, things look good, the company has continued to make progress. Importantly the results of each project is not binary for M&G. ADO have more than one iron in the fire as M&G has a range of applications - this can be seen in the number of patents they've taken.