Every so often I come across a company that has me completely mystified. Anteo (ASX : ADO) is such a company. It’s almost a decade old, and the CEO still earns more money than the company does from product revenues. Arguably, the “time” for Anteo’s technology has come and gone, it missed the major innovation burst in micro-titre / multiplex assays and even if it didn’t, the total market size for “plastic” (inclusive of any clever surface chemistry), is less than a $Bn. Let’s imagine a hypothetical scenario that Anteo managed to capture even 1% of that global market (generously, $10m), at current sales growth it would take 124 years to hit that number. Bully. Moreover, Anteo isn’t really a diagnostics company – it’s a chemistry company. None of Anteo’s products actually capture the key value in the in vitro diagnostics / point of care market, which is the biological content.
These sorts of data points tell you that this probably should never have been a company to begin with, at least in its current form. Developing and distributing a technology for the research market is far better suited to licensing Co. models than a product development company (and a public one at that). What I also don’t understand is the product commercialisation strategy. There are literally dozens of major companies (Life Technologies, PerkinElmer, Sigma-Aldrich) that, with relatively little effort, can be engaged to distribute the kinds of kits that Anteo is trying to push into the market, and do so on a global basis with huge visibility. Yes, there is a price to pay for that in terms of margin, but this is a volume and market capture game. More sophisticated business development strategies might even involve looking at a “content” partner like an Abcam or a Cell Signaling Technologies, to see how the Anteo surface chemistry technology differentiates the use and performance of high-multiplex biological “content”. Either the company doesn’t have the commercial chops to do those kinds of basic deals, or the technology isn’t really all that interesting.
I tend to suspect the latter.
In any event, the whole immunoassay space is changing. Label-free detection is the way of the future and the market growth isn’t in traditional assay development anymore. It may very well be that Anteo has a role to play in next generation bio-sensors, but we have plenty of neat substrates and surface chemistries that are already available, and selling well. PoC diagnostics also hasn’t been a stellar success yet so providing a relatively low value component of that value chain is a tough sell to shareholders. In short, this company should take its balance sheet and either return it to shareholders or come up with a genuinely useful way of making money. Simply expanding the number of variants of a core product seldom produces a useful outcome.
Oh, and the CEO is overpaid too.