ABMC--WHERE BILLIONAIRES MAKE MILLIONAIRES
The DD that will be disseminated in this post is a compilation of public source records, channel checks, phone calls, e-mails and other contributions which in no small part were provided to this forum, and thus this post, in the hopes that working together on this board, we can all make informed investment decisions that enhance our abilities to make money. When the collective whole works together in unison, the collective whole benefit. The contributors to this post are too numerous to detail, but, for those that have been here for awhile, their respective identities and contributions are well established and equally well known.
SHALL WE BEGIN?
On March 23, 2020 ABMC CEO Melissa Waterhouse issued a press release talking about the availability of their tests to be administered/manufactured in a capacity that would make them applicable for the COVID 19 infection/pandemic. This release was met with enhanced scrutiny by regulatory agencies that were seeking to crack down on companies attempting to exploit the pandemic, with no real expectation of having a product/service capable of augmenting already established tests, procedures and protocols. Although ABMC received such a letter advising and cautioning against these types of actions, unlike others', which were summarily halted, ABMC, DID HAVE such products, but were missing the all important FDA/EUA stamp of approval, which was obtained in May, 2020. The aforementioned scrutiny, in the form of an advisory letter, was met with trepidation by the CEO Melissa Waterhouse, who immediately convened a conference call of the Board of Directors, which were duly compensated for participating in same, to inform them of the letter. The aforementioned conference call happened on March 31, 2020. It is our understanding that the collective group emphasized the importance of obtaining FDA/EUA approval for their tests, and advised the company to refrain from additional news releases, until, such time, that approval was granted. This is important for all to understand when evaluating why the company said nothing during the past 3 months. Since we already know that they were granted FDA/EUA Approval, we can now move to the marketing and selling of said tests.
HOW MUCH DOES ALL OF THIS COST?
The process by which obtaining the highest medical evaluation standards currently in the world, FDA/EUA approval are not cheap. While seasoned biotech investors know that EUA approval is obviously, expedited, and requires far less time and thus capital expenditures, the process is nonetheless, cost intensive. To a small company such as ABMC, even tens of thousands of dollars can be quite expensive. Thus, funds are necessary to develop, enhance, submit and obtain the prerequisite approvals. Those fees were offset by a very strategic and well placed private placement which was obtained in February, 2020. The private placement in upwards of 2.8 million shares were procured, at a strike price, pursuant to SEC Rule 144, at .07 cents. Although the 10Q, talks about accredited investors, not fully identified, the recent 13G filing identifies one of the investors as Stuart Sternberg, (see SC 13g). Pursuant to SEC Rule 144, the earliest Mr. Sternberg could register his shares for sale is in August, 2020. More on Mr. Sternberg and his strategic investment later on in this post. Here is an excerpt from the annual report talking about government regulations and pre-requsite approvals in different countries and geographic regions:
In certain markets, the development, testing, manufacture and sale of our drug tests, and possible additional testing products for other substances or conditions, are subject to regulation by the United States and foreign regulatory agencies. Pursuant to the Federal Food, Drug, and Cosmetic Act, and associated regulations, the United State Food and Drug Administration (“FDA”) regulates the pre-clinical and clinical testing, manufacture, labeling, distribution and promotion of medical devices. When a product is a medical device, a 510(k) marketing application must be submitted to the FDA. A 510(k) is a premarketing submission made to the FDA to demonstrate that the device to be marketed is safe and effective. Applicants must compare their 510(k) device to one or more similar devices currently being marketed in the United States. Most of our urine-based products are marketed and sold in the Clinical market (in addition to other markets) and therefore, we have obtained 510(k) marketing clearance, CLIA waiver (see below) and/or Over-The-Counter (OTC) marketing clearance on our urine based products. Our oral fluid products are not 510(k) cleared; so we market and sell these products to the forensic market, employment market (under a limited exemption issued by FDA in July 2017) and for export outside the United States.
In order to sell our products in Canada, we must comply with ISO 13485:2003, the International Standards Organization’s Directive for Quality Systems for Medical Devices (MDD or Medical Device Directive), and in order to sell our products in the European Union, we must obtain CE marking for our products (in the European Union, a “CE” mark is affixed to the product for easy identification of quality products). Collectively, these standards are similar to FDA regulations, and are a reasonable assurance to the customer that our products are manufactured in a consistent manner to help ensure that quality defect-free goods are produced. As of the date of this report, we have received approval and the right to bear the CE mark on our Rapid Drug Screen, Rapid ONE, Rapid TOX, RDS InCup, Rapid TOX Cup II, Rapid Reader and OralStat. We are currently certified to I.S. EN ISO 13485:2016 with an expiration date of July 31, 2021.
Important to note that the aforementioned excerpts talk about the most stringent of approval/regulatory issues in respective countries, prior to the marketing and selling of said tests. The countries that are less stringent allow for the immediate marketing and sales of products, deemed from countries of trust, that have applied for the highest of regulatory approvals, FDA/EUA, and can thus be marketed and sold forthwith. It is in these countries, various in South America, that ABMC has been marketing and selling their products, pre-approval, through their distribution partner ALERGINICOS. The subsequent approval in May, has only enhanced sales, and now ALL countries in the world can order and market ABMC's test kits with the full power and confidence of FDA/EUA approval. Channel checks with ALLERGINICOS has thus yielded approximately 7.5 million ABMC test kits as having been sold via their distribution networks. Important fact is that these sales occurred, PRIOR TO MAY APPROVAL, and additional channel checks have evinced that multiple orders totaling millions in test kits has been placed.
ABMC MAKES $1.75 PROFIT PER TEST KIT SOLD.
Pursuant to the obtained May FDA/EUA approval, as confirmed via e-mails from CEO Melissa Waterhouse, ABMC has shipped over 1.0 million test kits and made $436,000.00 in profits. PROFITS, MEANING THEY HAVE A 43% PROFIT MARGIN. The aforementioned million test kits are not inclusive of the pre-approval test kits sold by ALERGINICOS, as since ABMC does not recognize revenues until the money hits the accounts per se, meaning they have a 60 day turnaround time, under GAAP guidelines, the aforementioned revenues will not be reflected until Q2. Additionally, channel checks have revealed that ABMC has signed NUMEROUS US DEALS, for millions of test kits domestically, numbering, conservatively in excess of ten million test kits. With a 43% profit margin, that means ABMC WILL MAKE $4.3 MILLION DOLLARS on this 10 million test kits. In addition, that does not account for the already 7.5 million test kits sold internationally by their distributors, which is in excess of 7.5 million test kits, meaning that ABMC will make an additional $3.2 million dollars. With the FDA/EUA approval now achieved, those sales are only going to grow exponentially.
WE PROJECT THAT ABMC WILL MAKE IN EXCESS OF $25,000,000.00 IN PROFIT BY END OF Q4, as no vaccine, according to current scientific/medical expectations, will be available until Spring of 2021.
DISTRIBUTION OF COVID-19 RAPID TEST
On March 23, 2020, the Company announced in a press releases that it began marketing (on March 17, 2020), via a distribution partnership, a Rapid Test to detect Covid-19 antibodies in whole blood, serum or plasma.. The test is not available for consumer use and is being marketed in full compliance with the March 16, 2020 Emergency Use Authorization (“EUA”) policy set forth by the FDA. An EUA was issued by FDA on May 29, 2020. While The Company does expect the marketing of the Covid-19 test to positively impact its revenues in Fiscal 2021, the Company does not yet know the full extent of the positive impact of COVID-19 test sales on its business, its financial condition and results of operations. The extent to which sales of the COVID-19 test may impact the Company’s business, operating results, financial condition, or liquidity in the future will depend on future developments which are evolving and highly uncertain including the duration of the outbreak and the need for antibody testing in the future.
REMEMBER THAT BILLIONAIRE INVESTOR?
So Mr. Stuart Sternberg, who is the owner of the MLB Tampa Bay Rays baseball team, and a seasoned hedge fund investor. Mr. Sternberg provided the funds in February, 2020, approximately $175,000.00 to get ABMC through the FDA/EUA approval process. Obviously, he saw a great opportunity, and, well that is why he is a BILLIONAIRE. To date, by Friday's closing price, for that $175,000.00 investment, Mr. Sternberg's investment is currently worth approximately $2.5 million dollars. Mr. Sternberg is connected via professional ties to our Chairman of the Board, Mr. Brahms. I have no doubt that Mr. Brahms provided Mr. Sternberg and his investment team a little insight to our gem, ABMC.
NOW FOR THE MEAT:
What started out as a simple private placement for Mr. Sternberg has now turned into a stellar opportunity to assist his true passion, the Tamp Bay Rays. If, everyone has been paying attention, MLB players are trying to negotiate a shortened 60 game season, to try and restore some sort of normalcy to the sport's world and also get paid. The big BUT in the aforementioned situation is TESTING/TESTING/TESTING.. Although players want to get paid, they also don't want to get sick. The MLB is currently utilizing a testing facility in Utah. We are hearing that there are numerous problems with that situation, which led to the recently publicized and embarrassing situation with the MLB Texas Rangers. This situation has become intolerable to the owners, players and specifically MLB Commissioner Bud Selig, who is trying to accommodate all parties in the adjudication of this pandemic, in relation to getting games scheduled and played. This has born opportunity to ABMC to provide efficacious test kits, on a daily and re-occurring basis to players, coaches, staff and trainers. These kits, as discussed earlier, already come with FDA/EUA approval, thus, they are considered trustworthy. In addition, our kits are considered MADE IN USA, which is another component of where the MLB wants to be.
In all, we are hearing that ABMC will likely, as a direct result of Mr. Sternberg's familiarity with the company, be provided a leg up in facilitating a comprehensive and very profitable business deal with MLB, which will then be segwayed into additional opportunities with the NFL/NBA/NHL and other domestic professional and quasi-professional sports' leagues that seek to protect their players and staff, while providing for an expeditious and controlled return to sporting events.
(Additional footnote: Pursuant to MLB bylaws, any signature to a party whereupon the inclusive entity seeks a business relationship with the league, and by proxy its' owners/operators, that relationship is subject to owner/operator approval).
NET OPERATING LOSSES: (NOL'S)
As I will not spend much time talking about this point, it is suffice to say that perusing the annual report has indicated that ABMC has approximately $5.0 million dollars in carry over net losses which means that we have nice tax offsets, on the majority of our initial profits.
Whether you look at the bottom line in that we are making 43% profit margins on our test kits, and we have been selling millions of these things since March, and have now garnered one of the hardest approvals in the medical world, FDA/EUA approval, and have the support of a major US sports team owner in Stuart Sternberg, with players and owners demanding COVID 19 TEST KITS, and we are MADE IN THE USA, well, shall we say that we are in for an exciting ride.
Predicated upon all of the aforementioned and delineated information, we currently, based upon the OS at 35,500,000.00 shares, value ABMC at a minimum of $2.50 a share currently, with an upwards target of $5.00--$7.50 based upon future sales and the procurement of a major sports league, which we feel is IMMINENT. If other leagues follow suit, WE FEEL LIKELY, that target will encroach $10.00 plus.
In addition to the COVID 19 test kits, ABMC has traditionally provided approved test kits for abused substances as well as PED's (performance enhancing drugs), which major sports leagues will also be keen on.