FYI | Jul 17 2019
Anteo Diagnostics: Recharging the batteries
By Pitt Street Research
A potential Lithium-Ion Battery Revolutionary
Anteo Diagnostics ((ADO)), having developed what is arguably the world’s most versatile surface modification technology, spent many years evaluating the use of the technology in the Life Sciences sector. It remains interested in Life Science applications, but a huge potential upside lies in lithium-ion batteries.
Battery developers have a strong interest in improving energy density and battery capacity, and one of the best strategies to achieve this is by using silicon in battery anodes. Currently, however, the silicon content in lithium-ion battery anodes is limited to ~6wt.% due to problems related to expansion and contraction at higher densities. ADO believes that its technology can ultimately increase the silicon content to >40wt.%. Little wonder, then, that battery developers are now interested in collaborating with ADO.
Should any such collaborations transition into formal licensing deals, the upside could be significant given the rapid increase in Electric Vehicle uptake globally as well as the increasing use of lithium-ion batteries in consumer electronics, energy storage systems and drone and niche applications.
Since our 20 March 2019 initiation report on ADO, the company has secured two such collaborations. One with the Spanish company called Silicio Ferrosolar was announced on 25 June while another with a ‘globally recognised battery anode producer’ was announced on 8 July.
Anteo has decided to streamline its focus on high-value opportunities, including POC and batteries. The unmet need in both sectors is tremendously high and ADO’s technology aims to fulfill it. We believe the company's strategy to focus on important opportunities first is a great way to utilize its cash.
The ongoing collaborations are expected to continue to drive the commercialization potential of this technology. Meanwhile, a licensing opportunity in other areas, such as medical devices, would be an added advantage. To that end ADO's recently announced collaboration with Lumos Diagnostics is promising.
We currently value Anteo at 2.3 cents per share base case and 3.3 cents optimistic case using a probability weighted DCF valuation approach.
We see Anteo being re-rated by the market as its Battery project yields highly efficient silicon composite anodes, and as the POC project moves towards commercialization.
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