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ZincFinger

08/16/11 5:05 PM

#28951 RE: DrMG #28945

There are two ways to interpret "value". By the most conventiol definition, obviously the current value is the closing price of .102/share, but I assume that's not what you're asking.

When attempting to make money from a rise in share price (in contrast to making it from dividends)what investors do is calculate what they think a reasonable current value is and try to buy a stock at a lower price. Pure traders (i.e.: Igotthemojo) are not interested in the future of the company or its technology, just short term price changes. I'm a long term buy and hold investor, so I'll assume you've been reading long enough to know that and understand that's the perspective I'm speaking from.

For an early stage, high tech, no-products-on-the-market-yet (for a little while anyway) company like KBLB, if you intend holding for a significant period the value you will be computing is what value you expect the company to attain within your time frame. I have two time frames: as I stated when first posting here, I plan on selling half of my shares sometime after the announcement of pure spider silk (if other major developments are close that might have large impacts on the price (and there probably will be) I'll probably wait until it looks like things are going to slow down a bit. The other half I intend to leave in for longer term: 5 to 10 or more years, depending on how events unfold and my needs.

For the short term - until after the announcement of pure spider silk I consider the chances that KBLB will attain that (or so close it doesn't make any difference: very close is good enough, IMHO) to be approximately 75 to 90%. (Much of the risk that it won't has been taken out by the attainment of a mixture of spider and worm silk protein in the Monster Silk from the gen1 worms **that was structurally incorporated***so that the mix was superior to silkworm silk although only about 80% of the strength of spider silk. That eliminated the possibility that the spider silk protein would be toxic to the worms or that their metabolism could not handle it for some other reason and that they would not be able to deal with it with their spinning mechanisms. Also reducing the risk (far more!) was the switch to the use of zinc fingers to make the genetic modifications which almost guarantees that the modifications will be made as intended (SIAL has made them to (individually, of course) remove every single gene in both the rat and mouse genomes already (how hard can it be for them?) And a study I posted here:
((included here below the double lines below))
proves that zinc fingers work in the silkworm.

The only risk that remains is whether the removal of the worm silk protein will result in the production of pure spider silk. It will make it completely impossible for any worm silk protein to be made, much less included into the silk. But there are a few other things that could go wrong (but probably could be "fixed" by further GMs if they did). That's why I give about 75 to 90% chance of success.\

How high that would raise the SP depends on how long you wanat to wait. There a number of other price moving events in the future which will be either extremely likely to work (the inclusion of the hepcidin sequence to add antibiotic properties) or very likely: the replacement of the spider silk protein gene with KBLB's sequence for a completely artificial protein and a deal on Monster Silk.

For pure spider silk only (without the others)
I would estimate that the share price would rise to between .50 and 1.00 (or even more) in a fairly short period (one day to several weeks) if the street just doesn't "get it" that pure spider silk is also a demonstration of the platform worm. If it does get that (probably slow realization) then the SP should continue to rise. Either the addition of hepcidin or the artificial sequence will make the platform worm blindingly obvious to all and the SP would IMHO go up to the vicinity of around 1.50 to $2.

In my calculation I also deduct 20% because you don't want to do all this just to break even.

So: pure spider silk ` Sp [.5 TO 1] x [.75 TO .9] x .8 (the discount) = range of approximately 30 to 72 cents
In other words I'd buy at this point at 30 cents or below and sell (half only) at 72 cents or above.

Note that 30 cents is higher than the SP went to just before the June 10 CC (which was a bit of an overrun). But then SINCE then we've had the announcement of the success of the 1st round of ZF GMs and that they've started the 2nd round. So the result seems reasonable to me.

I make simmilar caculations for the platform worm, hepcidin sequence, a deal on Monster Silk (should be worth 10 to 20% increase in SP at least) etc

For the long term calculation gives IMHO more of an illusion of accuracy so I make a very rough estimation of the potential size of the market (and by rough I mean ROUGH for something so new and paradigm breaking)and the chances for success, what share of the market KBLB could hope to retain, etc. (competition in some areas is inevitable).

AND ABOVE ALL, I KEEP IN MIND THAT THIS IS A VERY ROUGH SEAT OF THE PANTS ESTIMATE.

A very great deal depends on KBLBs ability to maintain a dominant position. The exclusive use of the zinc fingers for silkworms should do that very well. (aided by the rights to 200 spider genes). There are no other methods of genetic modification with a realistic chance of making such modifications even once, much less repeatedly and routinely for a wide range of products as KBLB will be able to do with the ZFs. [[[NOTE: there is another method of GM currently under development which MIGHT have a much more limited potential for making accurate genetic modifications to a very limited set of genes but by the time it would be available KBLB would be light years ahead of any competition. And whether it even has the potential for working on silkworm silk handling genes I don't know. And that's probably at least 5 to 10 years away. At this point in time I wouldn't consider it in decisions at all]]]

Note that SIAL will get a royalty on KBLB's products from ZFs and SIAL is very well aware of the potential (they are in the business of high tech materials!) so you can guarantee that if there is any assistance from SIAL that KBLB needs, it will get it!
=======================================
PROOF THAT ZINC FINGERS WORK IN SILKWORMS:

http://www.ncbi.nlm.nih.gov/pubmed/20692340

Insect Biochem Mol Biol. 2010 Oct;40(10):759-65. Epub 2010 Aug 6.
Targeted mutagenesis in the silkworm Bombyx mori using zinc finger nuclease mRNA injection.
Takasu Y, Kobayashi I, Beumer K, Uchino K, Sezutsu H, Sajwan S, Carroll D, Tamura T, Zurovec M.
Source
Biology Centre, Academy of Sciences and the Faculty of Natural Sciences, University of South Bohemia, Branisovska 31, 370 05 Ceske Budejovice, Czech Republic.

Abstract
Targeted mutagenesis is one of the key methods for functional gene analysis. A simplified variant of gene targeting uses direct microinjection of custom-designed Zinc Finger Nuclease (ZFN) mRNAs into Drosophila embryos. To evaluate the applicability of this method to gene targeting in another insect, we mutagenized the Bombyx mori epidermal color marker gene BmBLOS2, which controls the formation of uric acid granules in the larval epidermis. Our results revealed that ZFN mRNA injection is effective to induce somatic, as well as germline, mutations in a targeted gene by non-homologous end joining (NHEJ). The ZFN-induced NHEJ mutations lack end-filling and blunt ligation products, and include mainly 7 bp or longer deletions, as well as single nucleotide insertions. These observations suggest that the B. mori double-strand break repair system relies on microhomologies rather than on a canonical ligase IV-dependent mechanism. The frequency of germline mutants in G(1) was sufficient to be used for gene targeting relying on a screen based solely on molecular methods.
[[“lack end-filling and blunt ligation products”: that's good as they are highly undesirable.]]

NOTE: this work only affected a skin color marker and is in no way competition for KBLB