Earlier, I mentioned some points to consider about Abbott.
On January 18, 2007, Abbott announced the sale of the in vitro diagnostics to GE. If you consider how long it takes to put a deal together, the decision to sell was made about 6 months to a year earlier. That coincides with the lack of enthusiasm for any additional products. Put a big asterisk by this one. RECAF was the last and final product licensed for the in vitro division. All of the other multiple licenses went to the molecular division that they were not going to sell.
With the lack of progress, around May 2006, Dr. Moro stepped up and started working on the conversion of the test. This lack of enthusiasm on the part of Abbott toward new products has continued to date and all they have done is cut their head count in the division to improve the profit picture. Thanks to Dr. Moro's effort, fantastic results were presented at the ISOBM. I did not pay attention at the time but you should reread all of the abstract and take note that ABBOTT was not even mentioned. It was Frost and Dowell concluding with a statement that they wanted to increase the cancer / normal ratio before commercialization. Note my prior comments about the cancer / normal ratio. Levels of RECAF vary from individual to individual and Dr. Moro has selected an appropriate level to indicate cancer. You are just never going to get a high cancer / normal ratio with a large group at the top and a large group at the bottom.
So why the reason for the statement? Well, since the results were really outstanding, IMO it was done to ensure no feasibility milestone would have been due. They just wanted to save money for the balance sheet. What's next after that? The test performed great and Dr. Moro said that trials would begin in the first part of 2008. Think about this for a while. Trials are hugely expensive especially if they go for a PMA. It would also trigger another milestone. So what does Abbott do with a product that is going to cost a lot of money to continue with and you never know how the FDA is going to react to the results when the PMA is submitted. All the time Abbott is wanting to cut costs and probably continue to show a good balance sheet to enhance the sale of the division.
Add this all up and you can understand the press release we just got. The in vitro division is just an ugly duckling to Abbott and I would bet that if the sale had gone through with GE, the product would be in trials today.
Is the stock price going to drop on Monday? Yes, indeed because you would have to be blind not see this as a return. Is this reaction warranted? No is not because Abbott was not intending to do anything with the product since 2006. Since Dr. Moro was doing all the work, all that it cost them for the next two years was a few employees, some funding for the testing and $50,000 to Dr. Moro. They returned it just prior to the next $50.000 minimum royalties being due so you can surmise just how lean Abbott is operating the in vitro division.
You can rest assured that Dr. Moro has passed on all the technology to IMA and other interested parties and they can see for themselves what they have. It is a great product and Dr. Moro can absolutely nail early stage cancer with even a high throughput analyzer. We know he is paying cash for the loan so a third partner is coming, certainly a lot more enthusiastic than Abbott.
Where is the money coming from to pay for the loan? It certainly was not from Abbott. Taking the product to trials would only make Abbott pay some meager milestones.
The key Item to remember is RECAF works and works well and Abbott is obviously a distracted and poor partner.
AI
