Price($) 0.33
NTA ($) 0.22
P/NTA 1.52
Team 4
BurnPeriod 5.42
ProductPipe 12.6
ForeignMarket 3
Cash:Debt Debt Free
Previously known as Epitan, Clinuvel (CUV) is an "Australian biopharmaceutical company developing its photo-protective drug CUV1647 as a preventative treatment for a range of UV-related skin disorders as well as in cancer related treatments." Essentially 1 drug CUV1647 but with 5 applications. The product index is exceptionally high for a biotech at 12.6 (above 5 is good). This is due to CUV having over 2 pipelines in Ph III, 1 in PhII and 2 ready to start PhII.
On a quarterly basis, a few interesting financial patterns can be seen. The receipts have reduced from over $200k per quarter from 07Q1 to $0 in 08Q1. Although the receipts are relatively small compared to operational spending - this fact is interesting to note, suggesting that the operations that is earning income has stopped, perhaps to focus on trials. The 2007 Annual Report claims that the funding is sufficient for clinical trials until end of calendar year 2009. Fy07, including 08Q1, is one of CUV's highest spending period with investment spending of about $50m, and capital raising of $60m from equity.
This results in significant dilution of shareholders value with 302.15m shares and worth 3.3 cents a share. Hence the Price to cash is about 10 times - extremely risky. From the analysis of quarterly statements, if operational outflow remains at similar level with no large investments, then current cash level would last for another 5 quarters, 4 quarters short of CUV's prediction. In general, we consider cash lasting 8 quarters to be quite safe, and about 4 quarters to require a wait-and-see approach.
The management index of 4.0 is a about average but note that 2 PhD directors (excluding the current 4) have resigned. This may or may not reflect CUV's development into a late clinical stage company. Clinuvel has a presence in the US and Europe market by having offices there which are involved in clinical operations to an extent. The market exposure of 3.0 is slightly below desirable but not unacceptable.
In terms of product development, CUV has an excellent advanced stage pipeline with a product index of over 12 points. In general, we consider an index value above 5 to be good. CUV has two products undergoing PhIII and others at PhII or earlier. Biotechs at PhIII usually command good valuation with higher multiples over its NTA as will be considered shortly. The risk is that an unsuccessful trial, especially in PhIII, that fails will lead to extremely negative shareholder sentiment - a reduction of share value of 70% is not impossible.
All 5 of its top products currently in trial are based on a single compound CUV 1647. The advantage nature of several of these trials have de-risked safety issues related to this compound. Only efficacy of these drugs now need to be proven beyond PhIII and the multiple pipelines represent good diversification and increases of probability of compounds to market. The products range from protection against sun poisoning, sun intolerance to skin cancer related products.
The share price has been plunging from a high of over $1.2 in April 07 to the current value of about $0.35. Management believe this value does not account for any of its product potential at all. One speculative reason is the its 20% shareholder Absolute Capital Management (ACM) may have been affected by the credit meltdown of recent months. Apart of any unforseen financial obligation to ACM, the worst case scenario of the collapse of ACM is a sell-off of its holding in CUV. Despite this we believe the value of CUV should hold itself independent of its shareholders. At least 2 analyst reports value CUV to have a target price of over $1.00 (Analyst reports can be seen on the CUV's website).
According to the 2007 annual report, it holds about $28m in funds, with another $34m in cash. Ordinarily this is fine. But given the volatility of the share-market in recent times, the significant portion of $28m should be considered in the risky category and potentially worthless. Also note that in the latest quarter 08Q1, it has only over $9.9m in cash.
From the balance sheet point of view, CUV is debt free, as are most biotechs. In the current credit difficulty period, debt freeness is one less item to worry about. The intangibles are only a small fraction of total assets, yet due to the high number of shares, the NTA per share is only $0.21 - i.e Price/NTA of 1.52. This NTA is based on the 07Q4 which was $65.6m. To be conservative, removing the $28m of financial instruments (most likely liquid funds / derivatives) and also accounting for 08Q1 financial spending of $22m, that leaves NTA as about $15m. The revised Price to NTA ratio should be about 6 times, this is higher than desirable of 3 or below.
In summary, close scrutiny indicates that its financial position is not as cash-ready CUV would want investors to believe. Yet, with a number of late stage products in the pipeline, CUV should command a premium. Also taking technical analysis into account of the decreasing share price, the recommendation would be to buy CUV when it stabilizes slightly above half the current price at $0.20.
Recommendation: buy at $0.20 when stabilised.
Sunday, December 23, 2007
Saturday, November 17, 2007
Analysis - NEU - Neuren Pharmaceuticals
Price($) 0.24
NTA ($) 0.04
P/NTA 6.71
Team 6.4
BurnPeriod 0.39
ProductPipe 9.1
ForeignMarket 2.4
Cash:Debt DebtFree
Here's what Neuren (NEU) has to say about itself:
"...biopharmaceutical company developing novel therapeutics in the fields of brain injury and diseases and metabolic disorders. The Neuren portfolio comprises eight product families targeting markets with large unmet needs and limited competition.
Neuren has four lead candidate molecules—Glypromate , Motiva , NNZ-2566 and NNZ-2591— focused on a range of acute and chronic neurological conditions. The company also has a robust R&D program which includes drug discovery platforms addressing neurology, oncology and endocrinology."
NEU appears to be a strong drug developing company in the following aspects: broad product pipeline with several in advanced stage clinical trials - hence de-risked; a highly qualified scientific team and solid collaboration with overseas counterparts.
Recently purchased Hamilton Pharmaceuticals has added Motiva product line to its research. This product has passed Ph 2b but is now being retested for a new application - about to proceed to Ph 2.
It lead product Glypromate is undergoing Ph III. Its drug NNZ-2566 is in clinical trials with the support of the US Army. A collective score of 9.1 for products is far above the average.
Its management team consist of many scientific personnel which gives a high score of 6.4.Collaboration with foreign researchers such as US Army, Cambridge Uni produces a foreign market scor of 2.4 - almost the average. This is a positive factor considering NEU's products are not in market yet.
Although NEU looks like a scientific winner, its financial standing does not look healthy. Its burn rate for last financial year (Dec based, not June) is NZ$10. By the end of 3rd quarter 2007, cash reserve is only slightly more than NZ$1m. Hence cash flow is a serious problem. As part of its deal to acquire Hamilton Pharmaceuticals, CNF Investments and Vivo Ventures will invest US$3m via convertible notes - but this is only a short term solution to its heavy cash burn.
Another indicator is the price to NTA ratio at 6.71. At the level, the price for NEU is very expensive, even though the share prices has reduced significantly in the near past. For NEU to be inexpensive, all factors being equal, a fair price would be 10c. Watch out for the last quarter of the 2007 year to see the state of funding of NEU, i.e. whether it can raise more funding?
Recommendation: Sell until 15c
NTA ($) 0.04
P/NTA 6.71
Team 6.4
BurnPeriod 0.39
ProductPipe 9.1
ForeignMarket 2.4
Cash:Debt DebtFree
Here's what Neuren (NEU) has to say about itself:
"...biopharmaceutical company developing novel therapeutics in the fields of brain injury and diseases and metabolic disorders. The Neuren portfolio comprises eight product families targeting markets with large unmet needs and limited competition.
Neuren has four lead candidate molecules—Glypromate , Motiva , NNZ-2566 and NNZ-2591— focused on a range of acute and chronic neurological conditions. The company also has a robust R&D program which includes drug discovery platforms addressing neurology, oncology and endocrinology."
NEU appears to be a strong drug developing company in the following aspects: broad product pipeline with several in advanced stage clinical trials - hence de-risked; a highly qualified scientific team and solid collaboration with overseas counterparts.
Recently purchased Hamilton Pharmaceuticals has added Motiva product line to its research. This product has passed Ph 2b but is now being retested for a new application - about to proceed to Ph 2.
It lead product Glypromate is undergoing Ph III. Its drug NNZ-2566 is in clinical trials with the support of the US Army. A collective score of 9.1 for products is far above the average.
Its management team consist of many scientific personnel which gives a high score of 6.4.Collaboration with foreign researchers such as US Army, Cambridge Uni produces a foreign market scor of 2.4 - almost the average. This is a positive factor considering NEU's products are not in market yet.
Although NEU looks like a scientific winner, its financial standing does not look healthy. Its burn rate for last financial year (Dec based, not June) is NZ$10. By the end of 3rd quarter 2007, cash reserve is only slightly more than NZ$1m. Hence cash flow is a serious problem. As part of its deal to acquire Hamilton Pharmaceuticals, CNF Investments and Vivo Ventures will invest US$3m via convertible notes - but this is only a short term solution to its heavy cash burn.
Another indicator is the price to NTA ratio at 6.71. At the level, the price for NEU is very expensive, even though the share prices has reduced significantly in the near past. For NEU to be inexpensive, all factors being equal, a fair price would be 10c. Watch out for the last quarter of the 2007 year to see the state of funding of NEU, i.e. whether it can raise more funding?
Recommendation: Sell until 15c
Wednesday, November 7, 2007
Lightning Analysis - Gold - Carrick, Monarch
This is a very quick back of envelope calculation of how the prospective gold of Carrick Gold and Monarch Gold are priced.
crk mon
Shares(m) 112 462.226975
Resource(moz) 3 2.3
oz/sh 0.026785714 0.00497591
$/sh 2.06 0.26
$/oz 76.9 52.3
The numbers show Monarch's gold is priced cheaper by the market. Carrick Gold has had a run-up in recent weeks, due to significant high grade gold found.
Note that this analysis has not taken into account the operations effectiveness, financial standing, etc.
crk mon
Shares(m) 112 462.226975
Resource(moz) 3 2.3
oz/sh 0.026785714 0.00497591
$/sh 2.06 0.26
$/oz 76.9 52.3
The numbers show Monarch's gold is priced cheaper by the market. Carrick Gold has had a run-up in recent weeks, due to significant high grade gold found.
Note that this analysis has not taken into account the operations effectiveness, financial standing, etc.
Thursday, November 1, 2007
Analysis - PLD - Portland Orthopaedics
PLD - Portland Orthopaedics
Price($) 0.2
NTA ($) 0.06
P/NTA 3.54
Team 5
BurnPeriod 5
ProductPipe 27
ForeignMarket 3
Cash:Debt 13.33
Since the company brief on PLD on this blog a few months ago, I'm finally blogging its analysis here. Note that I still hold shares which I bought at 33c, still believe it is way undervalued.
Portland Orthopaedics designs and manufactures a range of orthopaedic products. Its 3 family of products are DTC, Equator Plus and M-Cor. The latter two have recently gained approval and is selling in the US, though it is still seeking approval here. The number of products already reached market in addition to products in the pipeline has earned PLD a very high product pipe index of 27.0
The primary market for PLD appears to be the US. The advantage is that this occurs a big market but the surge of the Australian dollar is a drawback. Its plans to venture into China and Europe are still progressing. In the US PLD has taken over its own distribution after former distributor Plus Orthopaedics was acquired. At this point, its distribution appears to be going smoothly with increased annual sales revenue of almost 400%. Based on current market penetration, the foreign market index of 3.0 is on the low side.
In terms of cash flow, the last quarter Operating CF loss is almost halved the previous quarter, despite decreasing receipts. This is a good sign if it is able to maintain low operating outflow. Based on the current quarter burn rate and the cash left, it can survive another 5 quarters.
Annual cash flow figures shows an increase operating loss by $3m. Although receipts doubled from $2.4m to $5.7m, payments to suppliers and employers doubled from $5m to $10.8m. Management acknowledged a once-off cost of over $1m but this does not explain the increased loss of over $2m. The write-off is a write-down of stock of the DTC product being superceded by the M-COR product range.
Other financial aspect include a very healthy cash to debt ratio of over 13 times. Its price to NTA is about 3.54 times is considered moderate, or not too expensive. In terms of trend however, PLD has been in a decline since mid June 2007. Technical investors may wait a while more until the price stabilised or swing up before buying.
Recommendation: Hold until downtrend flattens or swing up.
CashFlow Current 06Q2 06Q3 06Q4 07Q1 07Q2 07Q3 07Q4 08Q1
Cash at Start 3897 844 3,652 2,595 4,554 2,685 7,133 5,182 3,897
Receipts 1666 513 461 491 788 789 1,244 2,108 1,666
Operating CF -636 (1,263) (993) (1,041) (1,790) (1,331) (1,909) (1,173) (636)
Investing CF -30 (9) (55) (165) 0 (155) 22 (1) (30)
Financing CF -53 4,081 (9) 3,165 (79) 5,934 (64) (64) (53)
Net Change -719 2,809 (1,057) 1,959 (1,869) 4,448 (1,951) (1,238) (719)
Net Adjustments 0
Cash at End 3178 3,652 2,595 4,554 2,685 7,133 5,182 3,944 3,178
Price($) 0.2
NTA ($) 0.06
P/NTA 3.54
Team 5
BurnPeriod 5
ProductPipe 27
ForeignMarket 3
Cash:Debt 13.33
Since the company brief on PLD on this blog a few months ago, I'm finally blogging its analysis here. Note that I still hold shares which I bought at 33c, still believe it is way undervalued.
Portland Orthopaedics designs and manufactures a range of orthopaedic products. Its 3 family of products are DTC, Equator Plus and M-Cor. The latter two have recently gained approval and is selling in the US, though it is still seeking approval here. The number of products already reached market in addition to products in the pipeline has earned PLD a very high product pipe index of 27.0
The primary market for PLD appears to be the US. The advantage is that this occurs a big market but the surge of the Australian dollar is a drawback. Its plans to venture into China and Europe are still progressing. In the US PLD has taken over its own distribution after former distributor Plus Orthopaedics was acquired. At this point, its distribution appears to be going smoothly with increased annual sales revenue of almost 400%. Based on current market penetration, the foreign market index of 3.0 is on the low side.
In terms of cash flow, the last quarter Operating CF loss is almost halved the previous quarter, despite decreasing receipts. This is a good sign if it is able to maintain low operating outflow. Based on the current quarter burn rate and the cash left, it can survive another 5 quarters.
Annual cash flow figures shows an increase operating loss by $3m. Although receipts doubled from $2.4m to $5.7m, payments to suppliers and employers doubled from $5m to $10.8m. Management acknowledged a once-off cost of over $1m but this does not explain the increased loss of over $2m. The write-off is a write-down of stock of the DTC product being superceded by the M-COR product range.
Other financial aspect include a very healthy cash to debt ratio of over 13 times. Its price to NTA is about 3.54 times is considered moderate, or not too expensive. In terms of trend however, PLD has been in a decline since mid June 2007. Technical investors may wait a while more until the price stabilised or swing up before buying.
Recommendation: Hold until downtrend flattens or swing up.
CashFlow Current 06Q2 06Q3 06Q4 07Q1 07Q2 07Q3 07Q4 08Q1
Cash at Start 3897 844 3,652 2,595 4,554 2,685 7,133 5,182 3,897
Receipts 1666 513 461 491 788 789 1,244 2,108 1,666
Operating CF -636 (1,263) (993) (1,041) (1,790) (1,331) (1,909) (1,173) (636)
Investing CF -30 (9) (55) (165) 0 (155) 22 (1) (30)
Financing CF -53 4,081 (9) 3,165 (79) 5,934 (64) (64) (53)
Net Change -719 2,809 (1,057) 1,959 (1,869) 4,448 (1,951) (1,238) (719)
Net Adjustments 0
Cash at End 3178 3,652 2,595 4,554 2,685 7,133 5,182 3,944 3,178
Monday, October 29, 2007
Analysis - CYT - Cytopia
Price($) 0.46
NTA ($) 0.32
P/NTA 1.42
Team 5.5
BurnPeriod 6.86
ProductPipe 4.8
ForeignMarket 2.8
Cash:Debt DebtFree
Cytopia is a drug discovering company with a focus on oncology. Its products are based on developing protein based inhibitors, and had acquired over 10 patents. CYT’s computer based screening allow protein and other structures to be identified quickly whether or not further developments are required.
CYT has the following class of products: CYT997, JAK3, JAK2, FMS. Within these classes of products, there is more than one product. Many of these products are at the very early stages of the preclinical phase, with the exception of CYT997 which has two products about to enter Ph II. The product score of 4.8 is a good figure. Though many of the potential products are before preclinical, the breadth of the pipeline is important in diversifying the risks and is reflected in the score.
The fundamental figures collectively look good. Like many other biotechs, CYT is debt free. But unlike other biotechs, its cash position is good enough for CYT not to be required to report quarterly. From the half year reports, extrapolation of cash burn rate indicates CYT will last more than 1.5 years, in which time CYT anticipates to have several products in Phase II trials. Another major buy prompt is its Price to NTA of about 1.4 – we consider a ratio of up to 3.0 to be a reasonable buy.
Its team score of 5.5 is considered very good. At least 4 members of the management team are scientists, including the discoverer of JAK1 and JAK2 enzymes, Dr Andrew Wilks. The founder of CYT, Dr Kevin Healy is still a member of the directors.
The foreign market score is only 2.8 and is regarded as low. This is not surprising since none of CYT’s products are in market. However, even at the early stage, it can score 2.8 because CYT successfully engaged other pharmaceuticals for collaboration in their research. CYT’s R&D collaboration with Novartis on JAK3 is one of the biggest for an Australian biotech company. Being able to collaborate and receive payments from big pharma at such early stages appear to be the model for CYT and is commendable.
Thing to watch for is the conclusion of Ph 1 of CYT 997 trial (oral) 4th quarter this year.
In terms of technical analysis (for the immediate short term as of 26 Oct 07), the 5 day momentum is heading upwards from a negative position and is on the verge of positive. The general trend from end of July (about 70c) is downward, and for those waiting for an upswing, it may be best to wait for the upswing signal.
Recommendation: Buy up to 55c
NTA ($) 0.32
P/NTA 1.42
Team 5.5
BurnPeriod 6.86
ProductPipe 4.8
ForeignMarket 2.8
Cash:Debt DebtFree
Cytopia is a drug discovering company with a focus on oncology. Its products are based on developing protein based inhibitors, and had acquired over 10 patents. CYT’s computer based screening allow protein and other structures to be identified quickly whether or not further developments are required.
CYT has the following class of products: CYT997, JAK3, JAK2, FMS. Within these classes of products, there is more than one product. Many of these products are at the very early stages of the preclinical phase, with the exception of CYT997 which has two products about to enter Ph II. The product score of 4.8 is a good figure. Though many of the potential products are before preclinical, the breadth of the pipeline is important in diversifying the risks and is reflected in the score.
The fundamental figures collectively look good. Like many other biotechs, CYT is debt free. But unlike other biotechs, its cash position is good enough for CYT not to be required to report quarterly. From the half year reports, extrapolation of cash burn rate indicates CYT will last more than 1.5 years, in which time CYT anticipates to have several products in Phase II trials. Another major buy prompt is its Price to NTA of about 1.4 – we consider a ratio of up to 3.0 to be a reasonable buy.
Its team score of 5.5 is considered very good. At least 4 members of the management team are scientists, including the discoverer of JAK1 and JAK2 enzymes, Dr Andrew Wilks. The founder of CYT, Dr Kevin Healy is still a member of the directors.
The foreign market score is only 2.8 and is regarded as low. This is not surprising since none of CYT’s products are in market. However, even at the early stage, it can score 2.8 because CYT successfully engaged other pharmaceuticals for collaboration in their research. CYT’s R&D collaboration with Novartis on JAK3 is one of the biggest for an Australian biotech company. Being able to collaborate and receive payments from big pharma at such early stages appear to be the model for CYT and is commendable.
Thing to watch for is the conclusion of Ph 1 of CYT 997 trial (oral) 4th quarter this year.
In terms of technical analysis (for the immediate short term as of 26 Oct 07), the 5 day momentum is heading upwards from a negative position and is on the verge of positive. The general trend from end of July (about 70c) is downward, and for those waiting for an upswing, it may be best to wait for the upswing signal.
Recommendation: Buy up to 55c
Friday, October 19, 2007
Company Brief - ANX - Anadis
Price (18/10/07): $0.10
Shares (25/09/07): 103,668,014
Anadis is a unique biotech in two ways. Firstly, for a very small biotech company (Market Cap $10m), it has a product on the shelf already. Secondly, its technology platform based on polyclonal antibodies allow its product to be clasifeed as food rather than drug (according to companies. This implies that the clinical development, manufacture and trials of the products are faster and cheaper.
The product pipeline seem to be too broad and most are at the pre-clinical stage. The products target range from influenze, oncology to anti-bioterrorism. Diversification in potential products in general is a good thing but the broadness of this raises concern about ability to focus.
Briefly looking at the cash position, at the end of the last financial year, its cash remaining ($672k) is only one-fifth the cash required for operations of the last year ($3m). If the trend continues, ANX would be penniless before Dec07. Since mid 2007, it had negotiated a $5m line of credit, and raised another $700,000.
The poor cash position alone is enough for a "Don't Buy" recommendation, without needing further analysis. The thing to watch for would be how much of the $5m credit will be used and how much shares will be issued.
Recommendation: Don't Buy
Shares (25/09/07): 103,668,014
Anadis is a unique biotech in two ways. Firstly, for a very small biotech company (Market Cap $10m), it has a product on the shelf already. Secondly, its technology platform based on polyclonal antibodies allow its product to be clasifeed as food rather than drug (according to companies. This implies that the clinical development, manufacture and trials of the products are faster and cheaper.
The product pipeline seem to be too broad and most are at the pre-clinical stage. The products target range from influenze, oncology to anti-bioterrorism. Diversification in potential products in general is a good thing but the broadness of this raises concern about ability to focus.
Briefly looking at the cash position, at the end of the last financial year, its cash remaining ($672k) is only one-fifth the cash required for operations of the last year ($3m). If the trend continues, ANX would be penniless before Dec07. Since mid 2007, it had negotiated a $5m line of credit, and raised another $700,000.
The poor cash position alone is enough for a "Don't Buy" recommendation, without needing further analysis. The thing to watch for would be how much of the $5m credit will be used and how much shares will be issued.
Recommendation: Don't Buy
Monday, July 23, 2007
Analysis - PYC - Phylogica
Analysis - PYC - Phylogica
Price($) 0.31
NTA ($) 0.04
P/NTA 8.09
Team 3.6
BurnPeriod 3.52
ProductPipe 1.9
ForeignMarket 0
Cash:Debt Debt Free
A very promising technology underpins the uniqueness of this company. The company is involved in research and discovery of proteins that block the onset of other proteins thereby preventing disease. It is touted as a more advanced technology than antibodies. The company claims to have libraries of such phylomers which it seeks to out-licence to generate revenue.
The business model is to out-licence promising compounds after efficacy tests from animal study. As such, the typical Phase I to III cycles which are common among biotechs will not apply to PYC. The technology is unique but the success of the business model remains to be proven.
The team score is high, reflecting a good number of scientists in the company. The company is debt free. However, it appears to have enough cash for less than 3 quarters. In addition, the Price to NTA ratio of over 8 points is very high. Though a promising company, the high price does not seem to be warranted.
Recommendation: Consider buying at 7-9c (currently trading at 30c).
Price($) 0.31
NTA ($) 0.04
P/NTA 8.09
Team 3.6
BurnPeriod 3.52
ProductPipe 1.9
ForeignMarket 0
Cash:Debt Debt Free
A very promising technology underpins the uniqueness of this company. The company is involved in research and discovery of proteins that block the onset of other proteins thereby preventing disease. It is touted as a more advanced technology than antibodies. The company claims to have libraries of such phylomers which it seeks to out-licence to generate revenue.
The business model is to out-licence promising compounds after efficacy tests from animal study. As such, the typical Phase I to III cycles which are common among biotechs will not apply to PYC. The technology is unique but the success of the business model remains to be proven.
The team score is high, reflecting a good number of scientists in the company. The company is debt free. However, it appears to have enough cash for less than 3 quarters. In addition, the Price to NTA ratio of over 8 points is very high. Though a promising company, the high price does not seem to be warranted.
Recommendation: Consider buying at 7-9c (currently trading at 30c).
Wednesday, June 27, 2007
IPO to watch
Halcygen - Pharmaceutical, super generics, Roger Ashton
- intended listing 29 June 2007
Wind Hydrogen - wind farms, hydrogen storage technology
- applications close 25 July 2007
- intended listing 10 Aug 2007
- intended listing 29 June 2007
Wind Hydrogen - wind farms, hydrogen storage technology
- applications close 25 July 2007
- intended listing 10 Aug 2007
Analysis - GTG - Genetic Technologies
Price($) 0.17
NTA ($) 0.04
P/NTA 4.28
Team 2.8
BurnPeriod 4.16
ProductPipe 0.2
ForeignMarket 6.8
Cash:Debt 12.7
This is a brief analysis. GTG aims to grab as much patents as it can for so called "junk DNA". It believes that the junk DNA has immense potential that has yet to be discovered. This belief does have some truth behind it. Already its business case of licensing these junk DNA for research is gaining traction - but profitability is another question.
Its product development pipeline is understandably small since that is not its business focus. It does have a service business in providing paternity tests in Hong Kong. Its Foreign Market exposure is above average with agreements in several continents.
Unlike most biotechs, GTG has debt but this is small compared to current cash. Assuming current burn rate continues, GTG may last another 4 quarters.
One negative aspect is GTG has a large number of shares - about 360 million. At current price, the P/NTA indicates it is quite expensive. The business case is unique, higher risk than most biotechs, but higher potential returns.
Recommendation: Worth consider buying if it drops and stabilises at 7cents.
NTA ($) 0.04
P/NTA 4.28
Team 2.8
BurnPeriod 4.16
ProductPipe 0.2
ForeignMarket 6.8
Cash:Debt 12.7
This is a brief analysis. GTG aims to grab as much patents as it can for so called "junk DNA". It believes that the junk DNA has immense potential that has yet to be discovered. This belief does have some truth behind it. Already its business case of licensing these junk DNA for research is gaining traction - but profitability is another question.
Its product development pipeline is understandably small since that is not its business focus. It does have a service business in providing paternity tests in Hong Kong. Its Foreign Market exposure is above average with agreements in several continents.
Unlike most biotechs, GTG has debt but this is small compared to current cash. Assuming current burn rate continues, GTG may last another 4 quarters.
One negative aspect is GTG has a large number of shares - about 360 million. At current price, the P/NTA indicates it is quite expensive. The business case is unique, higher risk than most biotechs, but higher potential returns.
Recommendation: Worth consider buying if it drops and stabilises at 7cents.
Friday, June 15, 2007
TechAnalysis - BHP - abc pattern
A double bottom in BHP can be seen around 25 Sep 06 and 15 Jan 07. The latter bottom is the start of and a-b-c pattern. Carrying this pattern forward, the 100% resistance is encountered on 9th May 07 but finally broke through around 1 June 07.
On 14 June 07, the day of massive gains for BHP, the price shot pass the 133% level which is $33.60 to end the day at $33.90. The question going forward into a highly volatile market is can the 133% level be a point of attraction which caused the stock to retrace? Or can it shoot all the way to 150% at $34.50?
A double bottom in BHP can be seen around 25 Sep 06 and 15 Jan 07. The latter bottom is the start of and a-b-c pattern. Carrying this pattern forward, the 100% resistance is encountered on 9th May 07 but finally broke through around 1 June 07.
On 14 June 07, the day of massive gains for BHP, the price shot pass the 133% level which is $33.60 to end the day at $33.90. The question going forward into a highly volatile market is can the 133% level be a point of attraction which caused the stock to retrace? Or can it shoot all the way to 150% at $34.50?
Thursday, June 14, 2007
Analysis - BPH - Biopharmica
Analysis - BPH - Biopharmica
FREE SHARES
But wait ... let's look at this company first
Price($) 0.08
NTA ($) 0.07
P/NTA 1.26
Team 1.9
BurnPeriod 6.46
ProductPipe 8
ForeignMarket 0.5
Cash:Debt 3.62
The analysis shows great strength in some areas yet poor in others.
Debt: Unlike many early stage biotechs, BPH already has debt - while others typically have zero debt. Yet a cash:debt ratio of 3.62 should not be too risky. Projecting the previous cash burn rate forward, BPH can survive another 6.5 quarters or over 1.5 years if the burn rate remains the same. Not shown here is the fact that the operational expense for BPH is between $200k to $300k recently. This can be viewed positively as slow cash burn or viewed negatively as a lack of activity for the company.
Market: Though not many of its products are on the market, it has not shown any indication of targeting foreign markets on any scale. It does have collaboration with GE Healthcare and patents targeting foreign markets.
People: It has a small team with an even smaller number of scientifically qualified people at management level. It is not certain to what extent can BPH rely on its partners or collaborators on scientific knowledge including Universities.
Products: The product pipeline is one of the strong factors of BPH. Its lung disease chip is in the market while the Brain Monitor is in the process of gaining market approval. A tumor suppresor gene is also being developed but in the pre-clinical stage.
Price: Looking at the P/NTA ratio shows that it is one of the most undervalued startup biotechs. With a P/NTA value of 1.26 combined with 6 quarters of survival left, BPH looks very attractive despite other shortcomings.
Now for the FREE SHARES ....
as of this evening of 13 June 2007, after the close of the ASX, BPH announced that its subsidiary responsible for the Brain Monitor will be spun off. The terms is that each BPH holder on July 15 2007, will receive the same number of shares for free. The shares of the new company will be $0.20. BPH will likely shoot up at the open of tomorrow's trading.
Recommendation: Without Spinoff and Free Shares -> BUY up to 12c. With the knowledge of free shares -> Buy up to 22c.
Disclaimer: I do not own BPH shares yet - but likely to order.
FREE SHARES
But wait ... let's look at this company first
Price($) 0.08
NTA ($) 0.07
P/NTA 1.26
Team 1.9
BurnPeriod 6.46
ProductPipe 8
ForeignMarket 0.5
Cash:Debt 3.62
The analysis shows great strength in some areas yet poor in others.
Debt: Unlike many early stage biotechs, BPH already has debt - while others typically have zero debt. Yet a cash:debt ratio of 3.62 should not be too risky. Projecting the previous cash burn rate forward, BPH can survive another 6.5 quarters or over 1.5 years if the burn rate remains the same. Not shown here is the fact that the operational expense for BPH is between $200k to $300k recently. This can be viewed positively as slow cash burn or viewed negatively as a lack of activity for the company.
Market: Though not many of its products are on the market, it has not shown any indication of targeting foreign markets on any scale. It does have collaboration with GE Healthcare and patents targeting foreign markets.
People: It has a small team with an even smaller number of scientifically qualified people at management level. It is not certain to what extent can BPH rely on its partners or collaborators on scientific knowledge including Universities.
Products: The product pipeline is one of the strong factors of BPH. Its lung disease chip is in the market while the Brain Monitor is in the process of gaining market approval. A tumor suppresor gene is also being developed but in the pre-clinical stage.
Price: Looking at the P/NTA ratio shows that it is one of the most undervalued startup biotechs. With a P/NTA value of 1.26 combined with 6 quarters of survival left, BPH looks very attractive despite other shortcomings.
Now for the FREE SHARES ....
as of this evening of 13 June 2007, after the close of the ASX, BPH announced that its subsidiary responsible for the Brain Monitor will be spun off. The terms is that each BPH holder on July 15 2007, will receive the same number of shares for free. The shares of the new company will be $0.20. BPH will likely shoot up at the open of tomorrow's trading.
Recommendation: Without Spinoff and Free Shares -> BUY up to 12c. With the knowledge of free shares -> Buy up to 22c.
Disclaimer: I do not own BPH shares yet - but likely to order.
Thursday, June 7, 2007
Analysis Update - ACG - Atcor Medical
Atcor today announced the signing of distributors in India and China. It also re-signed distribution agreements in Singapore and Malaysia. The latter raises the question about the need to re-sign agreements. These countries has already been factored in the previous analysis and hence does not change the "Foreign Market" rating of 5.2.
ACG's share price has dropped since the last analysis but recovered to 16.5cents, that is 0.5c lower than the previous analysis. The P/NTA now stands at 1.128 similar to previous value but a little lower. All fundamentals considered, ACG still represents good value with good growth potential.
Recommendation: Buy up to 20c.
Disclaimer: I own ACG stocks.
ACG's share price has dropped since the last analysis but recovered to 16.5cents, that is 0.5c lower than the previous analysis. The P/NTA now stands at 1.128 similar to previous value but a little lower. All fundamentals considered, ACG still represents good value with good growth potential.
Recommendation: Buy up to 20c.
Disclaimer: I own ACG stocks.
Company Brief - PLD and VHL
VHL - Virax Holdings
As of 23 May, VHl has 107m shares, with cash at Dec 06 at $1.416m. In the Dec half year, operation cash outflow was $2.9m. According to 9 Nov 06, the rights issue raised $2.36m - this is not accounted for in the first half year account.
Assuming an operations cash burn of $2.8m a year, without other significant events, The remaining cash at Jun 07 will be around $1m. This infer a cash based NTA of 0.9 cents. The current price of 13 cents makes P/NTA of 14 which is relatively high.
Taking into account of the $1m payment from Transgene, the P/NTA is
about 7 which is still high but worth looking. The thing going for VHL
is the progress from the Transgene company - upon successful milestones
may release further licence payments. VHL's own lead product is
starting Ph II with another at PhII/Ib.
It is certainly worthwhile to keep an eye on VHL to the end of 2007. The price of 13 is high, but worth serious consideration if it levels at 7cents.
PLD - Portland Orthopaedics
Full approval was granted to PLD for the M-Cor primary hip replacement and use of related instrumentation by the TGA in Aust. This product status has been factored into previous analysis (not blogged yet) - so the product rating remain the same. However, the share price has dropped significantly with no strong reasons apart from PLD taking over distribution responsibilities. The P/NTA stands at 2.85 and is worth buying.
Dislaimer: I own stocks in PLD. I was but no longer a holder of VHL stock.
As of 23 May, VHl has 107m shares, with cash at Dec 06 at $1.416m. In the Dec half year, operation cash outflow was $2.9m. According to 9 Nov 06, the rights issue raised $2.36m - this is not accounted for in the first half year account.
Assuming an operations cash burn of $2.8m a year, without other significant events, The remaining cash at Jun 07 will be around $1m. This infer a cash based NTA of 0.9 cents. The current price of 13 cents makes P/NTA of 14 which is relatively high.
Taking into account of the $1m payment from Transgene, the P/NTA is
about 7 which is still high but worth looking. The thing going for VHL
is the progress from the Transgene company - upon successful milestones
may release further licence payments. VHL's own lead product is
starting Ph II with another at PhII/Ib.
It is certainly worthwhile to keep an eye on VHL to the end of 2007. The price of 13 is high, but worth serious consideration if it levels at 7cents.
PLD - Portland Orthopaedics
Full approval was granted to PLD for the M-Cor primary hip replacement and use of related instrumentation by the TGA in Aust. This product status has been factored into previous analysis (not blogged yet) - so the product rating remain the same. However, the share price has dropped significantly with no strong reasons apart from PLD taking over distribution responsibilities. The P/NTA stands at 2.85 and is worth buying.
Dislaimer: I own stocks in PLD. I was but no longer a holder of VHL stock.
Monday, April 23, 2007
Analysis Update - CGS - Cogstate
Analysis Update - CGS
CGS 3rd quarter results show an increase in revenue, and more importantly, operational cash flow positive. The revenue over the last four quarters show a steady increasing healthy trend compared to their respective quarters of the previous year.
However, note that in the same quarter last year, CGS was more operational cash flow positive, had more cash. It does seem that the business is establishing itself, able to generate strong revenue going forward. It has established a presence in the east coast of the US to serve both US and European markets. CGS mentioned an increase in headcount in the US for sales and support.
Though the business and revenue is growing, there is a concern that it may not be able to be profitable in time when compared to the cash level. Although this quarter is cash flow positive, it only has $1.7m in cash. Operational costs without revenue is $1m in the last quarter. It cannot afford significant reduction in cash in the future. In terms of profitability, the last half year net loss was $0.95m compared to 2005 net loss of $1.2m. The question is if the next half year result will be a much better net result.
Comparing numbers with the last analysis, significant change is the P/NTA ratio which increased from 2.61 to 3.15. The Quarters to Burn-out rate is of course negative due to net positive cash flow this quarter.
Recommendation: Wait until last quarter 2007 result.
CGS 3rd quarter results show an increase in revenue, and more importantly, operational cash flow positive. The revenue over the last four quarters show a steady increasing healthy trend compared to their respective quarters of the previous year.
However, note that in the same quarter last year, CGS was more operational cash flow positive, had more cash. It does seem that the business is establishing itself, able to generate strong revenue going forward. It has established a presence in the east coast of the US to serve both US and European markets. CGS mentioned an increase in headcount in the US for sales and support.
Though the business and revenue is growing, there is a concern that it may not be able to be profitable in time when compared to the cash level. Although this quarter is cash flow positive, it only has $1.7m in cash. Operational costs without revenue is $1m in the last quarter. It cannot afford significant reduction in cash in the future. In terms of profitability, the last half year net loss was $0.95m compared to 2005 net loss of $1.2m. The question is if the next half year result will be a much better net result.
Comparing numbers with the last analysis, significant change is the P/NTA ratio which increased from 2.61 to 3.15. The Quarters to Burn-out rate is of course negative due to net positive cash flow this quarter.
Recommendation: Wait until last quarter 2007 result.
Tuesday, April 17, 2007
Analysis - DDT - DataDot Technology
Analysis - DDT
Price($) 0.34
NTA ($) 0.09
P/NTA 3.8
Team 0
BurnPeriod -27.01
ProductPipe 0
ForeignMarket 5.8
Cash:Debt 3.82
DataDot Technology is a CSIRO spin-off company that commercializes hi-tech identification and authentication marker for products. It targets the automobile market as well as other high priced equipment. The company has subsidiary and business worldwide over several continents.
In terms of financials, the company is still a loss making company. However, the recent 2nd Qtr 2007 results is cash flow positive for operaions with highest operating receipts over the last 8 quarters analysed. Although it there was one other quarter (Q306) where it was operating cash flow positive, the cash at hand then was $2.17m compared to the recent quarter at $6.37m. Cash pattern indicates seasonality but recent business news would suggest increase in revenue going forward, possibly being profitable within the next 4 quarters. For such hi-tech business, first time profitablity make cause major re-rating of the stock.
Other financials include a modest debt to equity of about 20% and a healthy cash to debt ratio of 3.8 times. At Price/NTA of about 3.8 times, DDT is not expensive considering potential upside in acceptance of technology and beginning of penetration into world markets.
The stock has been trending down reaching just below 30c in the last few weeks before surging to 35c recently due to favourable reports on the technology.
Recommendation buy at 34c, expect reaching 60c within 2 years.
Price($) 0.34
NTA ($) 0.09
P/NTA 3.8
Team 0
BurnPeriod -27.01
ProductPipe 0
ForeignMarket 5.8
Cash:Debt 3.82
DataDot Technology is a CSIRO spin-off company that commercializes hi-tech identification and authentication marker for products. It targets the automobile market as well as other high priced equipment. The company has subsidiary and business worldwide over several continents.
In terms of financials, the company is still a loss making company. However, the recent 2nd Qtr 2007 results is cash flow positive for operaions with highest operating receipts over the last 8 quarters analysed. Although it there was one other quarter (Q306) where it was operating cash flow positive, the cash at hand then was $2.17m compared to the recent quarter at $6.37m. Cash pattern indicates seasonality but recent business news would suggest increase in revenue going forward, possibly being profitable within the next 4 quarters. For such hi-tech business, first time profitablity make cause major re-rating of the stock.
Other financials include a modest debt to equity of about 20% and a healthy cash to debt ratio of 3.8 times. At Price/NTA of about 3.8 times, DDT is not expensive considering potential upside in acceptance of technology and beginning of penetration into world markets.
The stock has been trending down reaching just below 30c in the last few weeks before surging to 35c recently due to favourable reports on the technology.
Recommendation buy at 34c, expect reaching 60c within 2 years.
Monday, March 26, 2007
Company Brief Update - MBP - Metabolic
Company Brief Update - MBP - Metabolic
Team score of at least 4.0.
MBP has been severely (overly) punished for the failure of efficacy of its obesity drugs. For the company's point of view that the Ph IIB Options Study on the obesity drug has not shown commercial viability, is positive hence saving cost of Ph III and enable the company to focus on other drug candidates in the pipeline. The company notes that the trial of the obesity drug was "completed on time" and "within budget".
Recently, MBP shares were bought at much higher price in the capital raising - 14.6m shares for $0.72 each and 316,000 options for $0.55. Compare this with today's price of $0.15
Much of its assets are in cash - about $24m left in Feb 2007. Its Dec06 half year loss of $8.8m is high (due to extensive clinical trials) but not likely for the current half. Current cash levels can sustain at least 18 months. Price to NTA is currently about 2 times.
Products on the pipeline in include ACV1 for neuropathic pain, oral peptide delivery platform and animal studies of AOD9604 for osteoporosis. The most advanced in the pipeline is ACV1 with two Ph IIA studies commenced which targets sciatic, diabetic and post-herpetic neuralgia neuropathic pain. A successful Ph I Extension study has also shown ACV1 can be tolerated at higher doses.
Expect the first Ph IIA study of ACV1 to be compeleted soon (by mid year) and the second study to complete by early 2008.
Recommendation: Buy up to 20c. Expect 25c at successful Ph IIA study by June. Expect 30c on further positive news by Dec 07.
Team score of at least 4.0.
MBP has been severely (overly) punished for the failure of efficacy of its obesity drugs. For the company's point of view that the Ph IIB Options Study on the obesity drug has not shown commercial viability, is positive hence saving cost of Ph III and enable the company to focus on other drug candidates in the pipeline. The company notes that the trial of the obesity drug was "completed on time" and "within budget".
Recently, MBP shares were bought at much higher price in the capital raising - 14.6m shares for $0.72 each and 316,000 options for $0.55. Compare this with today's price of $0.15
Much of its assets are in cash - about $24m left in Feb 2007. Its Dec06 half year loss of $8.8m is high (due to extensive clinical trials) but not likely for the current half. Current cash levels can sustain at least 18 months. Price to NTA is currently about 2 times.
Products on the pipeline in include ACV1 for neuropathic pain, oral peptide delivery platform and animal studies of AOD9604 for osteoporosis. The most advanced in the pipeline is ACV1 with two Ph IIA studies commenced which targets sciatic, diabetic and post-herpetic neuralgia neuropathic pain. A successful Ph I Extension study has also shown ACV1 can be tolerated at higher doses.
Expect the first Ph IIA study of ACV1 to be compeleted soon (by mid year) and the second study to complete by early 2008.
Recommendation: Buy up to 20c. Expect 25c at successful Ph IIA study by June. Expect 30c on further positive news by Dec 07.
Sunday, March 11, 2007
Analysis - PEP - Peplin
Peplin - PEP
Price($) 0.8
NTA ($) 0.23
P/NTA 3.45
Team 7.2
BurnPeriod 9.54
ProductPipe 6.9
ForeignMarket 1.1
Cash:Debt DebtFree
PEP's goal is to develop and commercialize cancer therapeutics – especially Skin Cancer. Its lead compound PE Topical "works by killing most cancer cells and then recruiting and activating local immune system to clean up and kill any remaining dead cancer cells." The compound is based on "a single molecular entity isolated and purified from a rapidly growing non-indigenous plant. It is not botanical and extract for regulatory purposes."
Its lead product PEP005 Topical is targeted for skin cancer. It has two applications in Phase IIb trials which are expected to complete by mid 2007. These two lead applications are against actinic keratosis (pre-cancerous lesions) and basal cell carcinoma (a common form of skin cancer). PEP is also developing PEP005 for leukemia and bladder cancer. It is also developing a host of compounds EPUFAs which it purchased recently. Pipeline looks healthy, giving the company various products to develop.
Several years ago PEP secured a major deal with US based Allergen to develop its lead anti skin cancer product. This deal terminated in Oct 2004 with the developing rights returning back to PEP. The reason given by Allergen was that it did not have the resources to pursue PEP's drug development and they emphasised that the termination was not due to the quality, safety or efficacy of the PEP compound.
Management team - The team score for PEP is above average - showing the team has got very high scientific expertise (PhD, MBBS, etc). This score does not even include the scientific advisory board, which when included will raise the score to probably 15. The board has been quite stable with Cherrell Hirst AO as the Chairman since at least 2002, and possibly earlier. She was a director since 2000 or earlier. Her plan to step down in the near future is expected from a biotech which is moving from scientific exploration to commercialization. Through the last 7 years PEP may have a few as 2 CEOs.
Market exposure of PEP has a low score of 1.1. Although PEP is focussing on the US market and has opened a subsidiary in the US, its presence or networking in other markets appear to be weak. Given that its lead drug is against skin cancer, the fact that PEP is not targeting the Asian market may not have a significant impact on its business. Nevertheless, PEP acknowledged the challenge in breaking the US market and its narrow exposure is a weakness to consider.
Financially, PEP has been debt free for over 3 years. Over the years, PEP was successful in gaining several government grants as well as licensing its compound to Allergen. In the last 3 quarters, it raised over $35m equity based finance. We need to expect that current funds are sufficient for present clinical trials, as further equity raising would dilute existing shareholdings. Assuming the current cash burn rate continues, there is enough funds to last between 8 to 9 quarters.
The current price to NTA is about 3.5 which is acceptable. A more desirable P/NTA is 3.0 which implies a price of 69c. Over the last year, PEP's price has varied between 63c to 88c. Positive trial results has contributed to the price rise while investors are sensitive to the point of punishing the stock for employee share options. Given its volatility, a negative Ph IIb results may push the stock below 20c. On the other hand, a positive result can easily push it beyond $1.10. Most factors considered, a fair price would be 72c over the next 2 months.
Recommendation: Buy at 72c over next 2 months, sell at 1.05 on news of Ph IIb completion (before results are released).
Price($) 0.8
NTA ($) 0.23
P/NTA 3.45
Team 7.2
BurnPeriod 9.54
ProductPipe 6.9
ForeignMarket 1.1
Cash:Debt DebtFree
PEP's goal is to develop and commercialize cancer therapeutics – especially Skin Cancer. Its lead compound PE Topical "works by killing most cancer cells and then recruiting and activating local immune system to clean up and kill any remaining dead cancer cells." The compound is based on "a single molecular entity isolated and purified from a rapidly growing non-indigenous plant. It is not botanical and extract for regulatory purposes."
Its lead product PEP005 Topical is targeted for skin cancer. It has two applications in Phase IIb trials which are expected to complete by mid 2007. These two lead applications are against actinic keratosis (pre-cancerous lesions) and basal cell carcinoma (a common form of skin cancer). PEP is also developing PEP005 for leukemia and bladder cancer. It is also developing a host of compounds EPUFAs which it purchased recently. Pipeline looks healthy, giving the company various products to develop.
Several years ago PEP secured a major deal with US based Allergen to develop its lead anti skin cancer product. This deal terminated in Oct 2004 with the developing rights returning back to PEP. The reason given by Allergen was that it did not have the resources to pursue PEP's drug development and they emphasised that the termination was not due to the quality, safety or efficacy of the PEP compound.
Management team - The team score for PEP is above average - showing the team has got very high scientific expertise (PhD, MBBS, etc). This score does not even include the scientific advisory board, which when included will raise the score to probably 15. The board has been quite stable with Cherrell Hirst AO as the Chairman since at least 2002, and possibly earlier. She was a director since 2000 or earlier. Her plan to step down in the near future is expected from a biotech which is moving from scientific exploration to commercialization. Through the last 7 years PEP may have a few as 2 CEOs.
Market exposure of PEP has a low score of 1.1. Although PEP is focussing on the US market and has opened a subsidiary in the US, its presence or networking in other markets appear to be weak. Given that its lead drug is against skin cancer, the fact that PEP is not targeting the Asian market may not have a significant impact on its business. Nevertheless, PEP acknowledged the challenge in breaking the US market and its narrow exposure is a weakness to consider.
Financially, PEP has been debt free for over 3 years. Over the years, PEP was successful in gaining several government grants as well as licensing its compound to Allergen. In the last 3 quarters, it raised over $35m equity based finance. We need to expect that current funds are sufficient for present clinical trials, as further equity raising would dilute existing shareholdings. Assuming the current cash burn rate continues, there is enough funds to last between 8 to 9 quarters.
The current price to NTA is about 3.5 which is acceptable. A more desirable P/NTA is 3.0 which implies a price of 69c. Over the last year, PEP's price has varied between 63c to 88c. Positive trial results has contributed to the price rise while investors are sensitive to the point of punishing the stock for employee share options. Given its volatility, a negative Ph IIb results may push the stock below 20c. On the other hand, a positive result can easily push it beyond $1.10. Most factors considered, a fair price would be 72c over the next 2 months.
Recommendation: Buy at 72c over next 2 months, sell at 1.05 on news of Ph IIb completion (before results are released).
Tuesday, February 27, 2007
Company Brief - MBP - Metabolic
Company Brief - MBP - Metabolic
Recent failure (lack of efficacy) at PhII trial sent the share diving to 20c. It was 40c for the past year but spiked at $1.10 early 2007 after news of PhII completion (note though PhII was completed then, the result was not known until now).
Cash about $25m
Shares about 300m
NTA based on cash is about 8.3c per share.
Current price is 2.4 times NTA - still too high.
Watch this stock when price falls below 9c.
Recent failure (lack of efficacy) at PhII trial sent the share diving to 20c. It was 40c for the past year but spiked at $1.10 early 2007 after news of PhII completion (note though PhII was completed then, the result was not known until now).
Cash about $25m
Shares about 300m
NTA based on cash is about 8.3c per share.
Current price is 2.4 times NTA - still too high.
Watch this stock when price falls below 9c.
Monday, February 26, 2007
Company Brief - AGX - Agenix
AGX - Agenix
- Undergone refocus in priorty since Dec 2005 when failed to find partnership deal for its development product Thromboview.
- Thromboview is a technology that uses radio-labelled antibodies to find blood clot in bodies. The market is the digital imaging market.
- Technologically, Thromboview is a significant product in its field - does not appear to have direct competitor. More importantly it has shown efficacy (positive results) in Phase II trials for Deep Vein Thrombosis DVT.
- It had previously shown to be successful in Phase Ib trial in Pulmonary Emboli PE.
- It is now in a better position to seek partnership deals. Successful future trails may more like increase the share price significantly, although current success are not reflected in the share price.
- Currently AGX has focussed completely on Thromboview. It has divested its other businesses: "Animal Health" and "Human Health". This focus developing a single product present great risk - if Thromboview is successful, AGX price wil shoot up, on the other hand if the trials fail, that may be the end for AGX.
- Financially, the company may survive for quite a while, it has $6m cash, $7m from divestments, another $3-$5m for sale of diagnostic test business. Cash burn is about $3.6 p.a. Optimistically, it can survive 4-5 years at current burn-rate. Price / NTA = 1.264 is very favaourable compared to other biotechs.
- It has an incredible team in its scientific advisory board. Team score is roughly 7.
- Recently one of its strategy to mitigate the one-product risk is that it acquired a Chinese company that has developed an anti-Hepapititis drug to successful Phase III trial. The company has a GMP manufacturing facility, connections with major Chinese medical universities and may provide a platform for AGX into the Chinese and Asian market.
- Major risks identified here. The AGX announcement indicated AGX's board and advisors have experience in doing business in China. However, there is no clear indication from the public information on the directors that indicate any of them had any associations with any biomedical business with China.
- The Chairman Ravi Govindan is also Managing Director of MatrixView - a software company with data compression technology focussed on the medical sector. He is an entrepreneur in Singapore and may have some limited experience with China. However, in an overall sense, I do not believe AGX as a whole has shown that it is able to understand and deal successfully in China. As a result - its planned acquisition is a significant risk.
- In summary, AGX is a company to watch. If there are further trial success with Thromboview, it may be too late to buy into, since the price would have rocketed. Its planned acquistion of the Chinese company is also something to watch for.
Recommendation: Extreme speculative buy at 10c within the next 3 month, given no significant news or events.
- Undergone refocus in priorty since Dec 2005 when failed to find partnership deal for its development product Thromboview.
- Thromboview is a technology that uses radio-labelled antibodies to find blood clot in bodies. The market is the digital imaging market.
- Technologically, Thromboview is a significant product in its field - does not appear to have direct competitor. More importantly it has shown efficacy (positive results) in Phase II trials for Deep Vein Thrombosis DVT.
- It had previously shown to be successful in Phase Ib trial in Pulmonary Emboli PE.
- It is now in a better position to seek partnership deals. Successful future trails may more like increase the share price significantly, although current success are not reflected in the share price.
- Currently AGX has focussed completely on Thromboview. It has divested its other businesses: "Animal Health" and "Human Health". This focus developing a single product present great risk - if Thromboview is successful, AGX price wil shoot up, on the other hand if the trials fail, that may be the end for AGX.
- Financially, the company may survive for quite a while, it has $6m cash, $7m from divestments, another $3-$5m for sale of diagnostic test business. Cash burn is about $3.6 p.a. Optimistically, it can survive 4-5 years at current burn-rate. Price / NTA = 1.264 is very favaourable compared to other biotechs.
- It has an incredible team in its scientific advisory board. Team score is roughly 7.
- Recently one of its strategy to mitigate the one-product risk is that it acquired a Chinese company that has developed an anti-Hepapititis drug to successful Phase III trial. The company has a GMP manufacturing facility, connections with major Chinese medical universities and may provide a platform for AGX into the Chinese and Asian market.
- Major risks identified here. The AGX announcement indicated AGX's board and advisors have experience in doing business in China. However, there is no clear indication from the public information on the directors that indicate any of them had any associations with any biomedical business with China.
- The Chairman Ravi Govindan is also Managing Director of MatrixView - a software company with data compression technology focussed on the medical sector. He is an entrepreneur in Singapore and may have some limited experience with China. However, in an overall sense, I do not believe AGX as a whole has shown that it is able to understand and deal successfully in China. As a result - its planned acquisition is a significant risk.
- In summary, AGX is a company to watch. If there are further trial success with Thromboview, it may be too late to buy into, since the price would have rocketed. Its planned acquistion of the Chinese company is also something to watch for.
Recommendation: Extreme speculative buy at 10c within the next 3 month, given no significant news or events.
Saturday, February 24, 2007
Analysis - ACG - Atcor Medical
ACG - Atcor Medical
AtCor is the "Central Blood Pressure" Company – whose flagship product is the SphygmoCor Systems that measures central blood pressure non-invasively. SphygmoCor system is the only FDA-approved non-invasive tool for measuring blood pressure at the heart.
Price($) 0.17
NTA ($) 0.15
P/NTA 1.16
Team 4.1
BurnPeriod 8.53
ProductPipe 5.3
ForeignMarket 5.2
Cash:Debt DebtFree
SphygmoCor is a suite of products and is composed of:
- SphygmoCor Px Aortic BP Waveform Analysis System
- SphygmoCor Vx Pulse Wave Velocity System
- SphygmoCor Mx Aortic BP Monitoring System
- Heart Rate Variability System
The company explains its product as:
"The SphygmoCor family of products provides tools for non-invasive assessment of the cardiovascular system and autonomic function. The technology that powers these products is centred on a transfer function that derives the pressure wave at the ascending aorta. The transfer function is a patented mathematical model of the properties of the brachial artery and provides important central data through a non-invasive recording of the pressure wave at the radial artery. SphygmoCor allows the physician to see the cardiovascular state of the patient, where it really matters – at the heart."
According to AtCor it is the only FDA approved product of its kind. The positive factors include: being a market leader, patented advanced product. The negative factors include: obsolescence if competitors develop better products, company depended on this one platform product.
Financially, AtCor is quite desirable, with the most attractive being its Price to NTA of 1.16. Good values of this ratio is considered to be up to 3.0 for a biotech company - the lower the better. In addition, it can survive over 8 quarters (2 years) given present cash burn rate. This is a company that has significant and increasing revenue streams unlike drug development companies. Expect the revenue to increase in the next year by 100% due to recently developed distributor channels in Asia and Europe. AtCor is also debt free.
The market targeted is not only medical practitioners and hospitals, but also include academic research organisations and big research pharmaceuticals in particular in the US. There is a risk of a superior product developed by competitors, and the risk being amplified by AtCor relying on this single technology, even though it has multi-applications.
The management team has relatively few scientists, but since the platform is now commercially available, this is not a main concern. Although it does indicate that they are not actively developing new products. The management team seems to have the experience to lead the commercialization process.
In summary - the key figures presented above are very positive. The two major risk is the ability of management to increase sales / product domination and the risk of a better product from competitors.
Technical Analysis - started nov/dec 05 at 70c, peaked 85c in Dec05 and declined to stable level of 17c to 20c from Aug 06.
Recommendation: Buy below 18c
Note: CC has just bought shares a few days ago at 18.5c and the ACG had closed at 20c for the last few days.
AtCor is the "Central Blood Pressure" Company – whose flagship product is the SphygmoCor Systems that measures central blood pressure non-invasively. SphygmoCor system is the only FDA-approved non-invasive tool for measuring blood pressure at the heart.
Price($) 0.17
NTA ($) 0.15
P/NTA 1.16
Team 4.1
BurnPeriod 8.53
ProductPipe 5.3
ForeignMarket 5.2
Cash:Debt DebtFree
SphygmoCor is a suite of products and is composed of:
- SphygmoCor Px Aortic BP Waveform Analysis System
- SphygmoCor Vx Pulse Wave Velocity System
- SphygmoCor Mx Aortic BP Monitoring System
- Heart Rate Variability System
The company explains its product as:
"The SphygmoCor family of products provides tools for non-invasive assessment of the cardiovascular system and autonomic function. The technology that powers these products is centred on a transfer function that derives the pressure wave at the ascending aorta. The transfer function is a patented mathematical model of the properties of the brachial artery and provides important central data through a non-invasive recording of the pressure wave at the radial artery. SphygmoCor allows the physician to see the cardiovascular state of the patient, where it really matters – at the heart."
According to AtCor it is the only FDA approved product of its kind. The positive factors include: being a market leader, patented advanced product. The negative factors include: obsolescence if competitors develop better products, company depended on this one platform product.
Financially, AtCor is quite desirable, with the most attractive being its Price to NTA of 1.16. Good values of this ratio is considered to be up to 3.0 for a biotech company - the lower the better. In addition, it can survive over 8 quarters (2 years) given present cash burn rate. This is a company that has significant and increasing revenue streams unlike drug development companies. Expect the revenue to increase in the next year by 100% due to recently developed distributor channels in Asia and Europe. AtCor is also debt free.
The market targeted is not only medical practitioners and hospitals, but also include academic research organisations and big research pharmaceuticals in particular in the US. There is a risk of a superior product developed by competitors, and the risk being amplified by AtCor relying on this single technology, even though it has multi-applications.
The management team has relatively few scientists, but since the platform is now commercially available, this is not a main concern. Although it does indicate that they are not actively developing new products. The management team seems to have the experience to lead the commercialization process.
In summary - the key figures presented above are very positive. The two major risk is the ability of management to increase sales / product domination and the risk of a better product from competitors.
Technical Analysis - started nov/dec 05 at 70c, peaked 85c in Dec05 and declined to stable level of 17c to 20c from Aug 06.
Recommendation: Buy below 18c
Note: CC has just bought shares a few days ago at 18.5c and the ACG had closed at 20c for the last few days.
Saturday, February 10, 2007
Analysis - CGS - Cogstate
CGS - Cogstate
Price($) 0.20
NTA ($) 0.08
P/NTA 2.61
Team 4.1
BurnPeriod 3.4
ProductPipe 23.0
ForeignMarket 6.0
Cash:Debt DebtFree
Cogstate develops computerised based cognitive based tests.
They specifically target the drug development market, in particular focussing on a small number of large global pharmaceutical companies. Eg. GSK, Pfizer, Merck, Abott.To date, they have signed more than 4 agreement with the big pharmas.
They have divested their drug development program to focus solely on the cognition test products. This strategy increases the risk of dependence on one product. However, CGS has about 4 products and R&D is ongoing which mitigate this risk to a certain extent.
Their market is mainly the US (where the big pharmas are), in addition to an agreement with a Danish and Japanese company. There is a lack of indication if they will expand to the broader Asian and European markets.
As such, the Foreign Market score and the Product Pipeline score is above average. The Team score is just moderate, but since they are not in the drug development business, it is not crucial to have a large team of scientists (more scientists = higher Team score).
Financially, the company is still making a loss, with most quarterly operations negative except for 06 Qtr3. Receipts were steadily growing over the last 3 quarters but the total operations outflow is at similar level meaning their cost increases the same rate as revenue. The company is debt-free with a cash burn rate survival of 3.41 more quarters.
The shares of CGS have not been very liquid over the last few months. Overall, there is good business strategy, product range and even proven ability of commercialization. However it is still to make sustained profits. Financially, the cash position, although not serious yet, suggests we need to be cautious. Speculatively, their is a high upside, in the event of more agreement with big pharmas.
In Feb 06, the price was still about 10c, but agreements with GSK, directors buying share, divestment of drug development pushed the price to 28c in April and August. Since Nov then the price has steadied around 20c. At the current price of 2.6 times NTA, it is on the low priced side.
All things considered here, and before the release of the 07 half year report, the Recommendation: Buy at 0.17c
Price($) 0.20
NTA ($) 0.08
P/NTA 2.61
Team 4.1
BurnPeriod 3.4
ProductPipe 23.0
ForeignMarket 6.0
Cash:Debt DebtFree
Cogstate develops computerised based cognitive based tests.
They specifically target the drug development market, in particular focussing on a small number of large global pharmaceutical companies. Eg. GSK, Pfizer, Merck, Abott.To date, they have signed more than 4 agreement with the big pharmas.
They have divested their drug development program to focus solely on the cognition test products. This strategy increases the risk of dependence on one product. However, CGS has about 4 products and R&D is ongoing which mitigate this risk to a certain extent.
Their market is mainly the US (where the big pharmas are), in addition to an agreement with a Danish and Japanese company. There is a lack of indication if they will expand to the broader Asian and European markets.
As such, the Foreign Market score and the Product Pipeline score is above average. The Team score is just moderate, but since they are not in the drug development business, it is not crucial to have a large team of scientists (more scientists = higher Team score).
Financially, the company is still making a loss, with most quarterly operations negative except for 06 Qtr3. Receipts were steadily growing over the last 3 quarters but the total operations outflow is at similar level meaning their cost increases the same rate as revenue. The company is debt-free with a cash burn rate survival of 3.41 more quarters.
The shares of CGS have not been very liquid over the last few months. Overall, there is good business strategy, product range and even proven ability of commercialization. However it is still to make sustained profits. Financially, the cash position, although not serious yet, suggests we need to be cautious. Speculatively, their is a high upside, in the event of more agreement with big pharmas.
In Feb 06, the price was still about 10c, but agreements with GSK, directors buying share, divestment of drug development pushed the price to 28c in April and August. Since Nov then the price has steadied around 20c. At the current price of 2.6 times NTA, it is on the low priced side.
All things considered here, and before the release of the 07 half year report, the Recommendation: Buy at 0.17c
Wednesday, January 31, 2007
Analysis Update - BOS - Biosignal
2nd quarter update.
Burn-period = 8.89
Receipts in the second quarter fell very slightly from $139k to $132k. Operational cost almost halved compared to last quarter. The effect of this is the burn-out period improved from 5.10 previously to 8.89. Most of the other metrics remain the same as is business fundamentals. The same recommendation applies.
Burn-period = 8.89
Receipts in the second quarter fell very slightly from $139k to $132k. Operational cost almost halved compared to last quarter. The effect of this is the burn-out period improved from 5.10 previously to 8.89. Most of the other metrics remain the same as is business fundamentals. The same recommendation applies.
Tuesday, January 23, 2007
Company Brief - SEN - Senetas - 070123
Company Brief - SEN - Senetas
I've been following Senetas over a month and it seems that the price has plunged due to various uncertainties, such as previous first quarter profits, its US distributor (investigated for stock options and accounting practices) and the recent restructure / capital raising. The negative sentiment does not seem to stem from their previous annual results.
Given their current price of 30cents and EPS of 2.02cents at FY2006, this is a PE of 15 for a hi-tech company which is profitable and positive cashflow.
NEWS - a joint venture is announced with a French company on Quantum Cryptography. This may sound new and should be exciting but in the US there is a company call MagiQ which is in this area. Nonetheless the market is new, and there are only a few players.
Good points include overseas market penetration with clients in US, Middle East and JV with French company. Directors mostly have law background - not sure if this is advantage - but have personnel with IT experience (incl CEO). Product range also exist, hence it does not rely on single product.
Recommendation: Speculative buy.
I've been following Senetas over a month and it seems that the price has plunged due to various uncertainties, such as previous first quarter profits, its US distributor (investigated for stock options and accounting practices) and the recent restructure / capital raising. The negative sentiment does not seem to stem from their previous annual results.
Given their current price of 30cents and EPS of 2.02cents at FY2006, this is a PE of 15 for a hi-tech company which is profitable and positive cashflow.
NEWS - a joint venture is announced with a French company on Quantum Cryptography. This may sound new and should be exciting but in the US there is a company call MagiQ which is in this area. Nonetheless the market is new, and there are only a few players.
Good points include overseas market penetration with clients in US, Middle East and JV with French company. Directors mostly have law background - not sure if this is advantage - but have personnel with IT experience (incl CEO). Product range also exist, hence it does not rely on single product.
Recommendation: Speculative buy.
Sunday, January 14, 2007
Biotech Valuation Indices
A brief summary of the indices used in the analysis of biotech stocks.
Updated - the date any update to this analysis is done
Company - Stock code of company
Price($) - Market price of stock at date of analysis
NTA ($) - Net Tangible Assets = Total Assets - Intellectual property and other intangibles.
P/NTA - Ratio of Price to NTA - a value of 3 or below is considered underpriced and worth buying. A value of 9 or above is definitely not worth buying.
Team - the quality of management is represented by this index. It is based on a points system that rates the directors on their qualifications. (see key below) - over 5.0 is good.
BurnPeriod - the number of quarters left before cash runs out, based on the previous quarters cash burn rate. Over 4 quarters is fair. Over 8 quarters is worth investing.
ProductPipe - the stage of the product development ranging from pre-clinical tests to commercialization. Over a value of 5.0 is a good sign.
ForeignMarket - Companies with products that sell internationally are more highly rated. (see key below). Over a value of 3 is a good sign.
Cash:Debt - the ratio of cash to debt of the company.
Key to Index Ratings
Product
Phase 1 = 1
Phase 2 = 2
Phase 3 = 3
Market Approved = 4
In Market =5
Team
Prof = 1.5
PhD = 1.0
Master = 0.8
Hons = 0.7
MBA = 0.6
Biotech Exp (10year) = 0.5
Foreign Market Penetration
Plan to Enter = 0.5
Just Entered = 0.9
1-3 years = 1.5
Over3 years = 2.0
The indices listed above are aimed to highlight the fundamentals of the company and is used to reach a decision on whether to buy a certain stock. The philosophy is not to determine a numerical value for the company but rather a decision whether to buy a certain stock or not. It does not explicitly provide a sell decision because we implicitly assume that when we buy a biotech stock, we will not sell it until it doubles in price at the very least.
The Team index is scored based on scientific qualifications, since this analysis is focussed on biotech stocks. MBA is also recognized here. Note that this scheme of rating is not accurate as there are those which contribute significantly to their companies even though they do not have high scientific qualifications. However, this rating is adopted because this analysis rates the management without personally meeting the management team.
Not all biotech companies develop drugs which need to go through the whole clinical testing phase. In such cases, the Product index is still used but with each product judged in terms of their development and their timeframe to commercialization.
Updated - the date any update to this analysis is done
Company - Stock code of company
Price($) - Market price of stock at date of analysis
NTA ($) - Net Tangible Assets = Total Assets - Intellectual property and other intangibles.
P/NTA - Ratio of Price to NTA - a value of 3 or below is considered underpriced and worth buying. A value of 9 or above is definitely not worth buying.
Team - the quality of management is represented by this index. It is based on a points system that rates the directors on their qualifications. (see key below) - over 5.0 is good.
BurnPeriod - the number of quarters left before cash runs out, based on the previous quarters cash burn rate. Over 4 quarters is fair. Over 8 quarters is worth investing.
ProductPipe - the stage of the product development ranging from pre-clinical tests to commercialization. Over a value of 5.0 is a good sign.
ForeignMarket - Companies with products that sell internationally are more highly rated. (see key below). Over a value of 3 is a good sign.
Cash:Debt - the ratio of cash to debt of the company.
Key to Index Ratings
Product
Phase 1 = 1
Phase 2 = 2
Phase 3 = 3
Market Approved = 4
In Market =5
Team
Prof = 1.5
PhD = 1.0
Master = 0.8
Hons = 0.7
MBA = 0.6
Biotech Exp (10year) = 0.5
Foreign Market Penetration
Plan to Enter = 0.5
Just Entered = 0.9
1-3 years = 1.5
Over3 years = 2.0
The indices listed above are aimed to highlight the fundamentals of the company and is used to reach a decision on whether to buy a certain stock. The philosophy is not to determine a numerical value for the company but rather a decision whether to buy a certain stock or not. It does not explicitly provide a sell decision because we implicitly assume that when we buy a biotech stock, we will not sell it until it doubles in price at the very least.
The Team index is scored based on scientific qualifications, since this analysis is focussed on biotech stocks. MBA is also recognized here. Note that this scheme of rating is not accurate as there are those which contribute significantly to their companies even though they do not have high scientific qualifications. However, this rating is adopted because this analysis rates the management without personally meeting the management team.
Not all biotech companies develop drugs which need to go through the whole clinical testing phase. In such cases, the Product index is still used but with each product judged in terms of their development and their timeframe to commercialization.
Analysis - BOS - Biosignal
(See Biotech Valuation Indices)
Updated 11/01/07
Company BOS
Price($) 0.16
NTA ($) 0.05
P/NTA 3.27
Team 5.6
BurnPeriod 5.1
ProductPipe 6.6
ForeignMarket 1.5
Cash:Debt Inf
Biosignal - company with a unique technology platform. Biosignal is able to synthesise a compound found in seaweed in Botany Bay that has the ability to prevent or disrupt the formation of biofilms without killing the bacteria that produces it.
Biofilms can cause human bacterial infection, they may form plague on teeth, they are the slime in ponds or the gunk in the drain. Biofilm form on surfaces expose to water and creates an environment for bacteria growth. They can also build up on the bottom of ships and vessels.
Biosignal's compound is a platform technology because it has many application, such as marine anti-fouling paint and in healthcare. Biosignal aims first to target healthcare by incorporating its compound into contact lenses. Other medical applications are numerous. One of the challenge for management is to cleverly identify one from these many applications that would generate return to investors quickly and significantly.
Its team index of 5.6 is considered very good with management composed of highly qualified people. The foreign market index of 1.5 is low. Biosignal has been in negotiations with a few contacts overseas (US-contact lenses, Japan and Europe-medical devices) but this is yet to mature. The recent investment made by Japan's Restoration Company and the inclusion of entrepreneur Prof Gunter Pauli indicates confidence in Biosignal. Locally, BHP and Santos are collaborating with Biosignal in their interest to apply the technology to their gas pipelines.
The product index of 6.6 is quite high among biotechs. Some applications such as the marine anti-fouling paint and contact lenses do not require the same stringent clinical trials as other drug development pipeline, but the contact lense for example still needs to go through safety trials. Effectively, the marine paint and contact lenses are assumed to be effectively in Phase II, with commercialization expected in 2007 and 2008 respectively.
In terms of cash flow, the last 3 quarters of 2006 had receipts of over $400k, but the previous quarter dropped to over $100k. Estimating cash burn, it can survive for another 5 quarters assuming similar cash burn rate. Hence this survival rate is not too bad but close attention to the next few quarters is warranted.
The company is debt free. The Price to Net Tangible Assets is 3.27 times. Comparing with other biotech companies, P/NTA index of anything below 3 is undervalued, and 3.27 is also reckoned to be on the not pricey side.
The price has dropped from about 19c in Sept and starting to stabilise at 16c now.
Recommendation: Buy when price stabilise or reaches 15.5c
* Recommendation assumes no significant unforseen negative changes.
Updated 11/01/07
Company BOS
Price($) 0.16
NTA ($) 0.05
P/NTA 3.27
Team 5.6
BurnPeriod 5.1
ProductPipe 6.6
ForeignMarket 1.5
Cash:Debt Inf
Biosignal - company with a unique technology platform. Biosignal is able to synthesise a compound found in seaweed in Botany Bay that has the ability to prevent or disrupt the formation of biofilms without killing the bacteria that produces it.
Biofilms can cause human bacterial infection, they may form plague on teeth, they are the slime in ponds or the gunk in the drain. Biofilm form on surfaces expose to water and creates an environment for bacteria growth. They can also build up on the bottom of ships and vessels.
Biosignal's compound is a platform technology because it has many application, such as marine anti-fouling paint and in healthcare. Biosignal aims first to target healthcare by incorporating its compound into contact lenses. Other medical applications are numerous. One of the challenge for management is to cleverly identify one from these many applications that would generate return to investors quickly and significantly.
Its team index of 5.6 is considered very good with management composed of highly qualified people. The foreign market index of 1.5 is low. Biosignal has been in negotiations with a few contacts overseas (US-contact lenses, Japan and Europe-medical devices) but this is yet to mature. The recent investment made by Japan's Restoration Company and the inclusion of entrepreneur Prof Gunter Pauli indicates confidence in Biosignal. Locally, BHP and Santos are collaborating with Biosignal in their interest to apply the technology to their gas pipelines.
The product index of 6.6 is quite high among biotechs. Some applications such as the marine anti-fouling paint and contact lenses do not require the same stringent clinical trials as other drug development pipeline, but the contact lense for example still needs to go through safety trials. Effectively, the marine paint and contact lenses are assumed to be effectively in Phase II, with commercialization expected in 2007 and 2008 respectively.
In terms of cash flow, the last 3 quarters of 2006 had receipts of over $400k, but the previous quarter dropped to over $100k. Estimating cash burn, it can survive for another 5 quarters assuming similar cash burn rate. Hence this survival rate is not too bad but close attention to the next few quarters is warranted.
The company is debt free. The Price to Net Tangible Assets is 3.27 times. Comparing with other biotech companies, P/NTA index of anything below 3 is undervalued, and 3.27 is also reckoned to be on the not pricey side.
The price has dropped from about 19c in Sept and starting to stabilise at 16c now.
Recommendation: Buy when price stabilise or reaches 15.5c
* Recommendation assumes no significant unforseen negative changes.
Friday, January 12, 2007
Sector Watch 070112 - Biotech
Since the new year 2007, there has been an obvious (to me at least) increased trading in biotech stocks sometimes FNKMR - for no known market reason (See Glossary). Here are a few reasons for this, which also meant to encourage caution:
- The Australian index is at all time highs despite recent corrections. This has been led by the resource boom of over 3 years followed by the steady growth of bank stocks. The market knows things have been over-priced and companies trading below their value are very difficult to find to invest in. Yet there is a continued growth in cash (eg from superannuation) looking for investment. Hence one of the sectors that have been shunned by main line investors is biotech. This is where money is starting to flow in.
- As an observer and analyst of biotech stocks over the last few years, I see the current increased trading to be exciting yet cautious. This beginning of a mini-boom in biotech stocks is going to make this sector even more volatile if recent trading pattern continues. The recent trading pattern in which some biotech stocks surge FNKMR - stocks are pushed up without any significant development in their product pipeline, changes in financial status or corporate activity.
- This serves to warn not to follow the market into biotech stocks. The serious biotech investor is encouraged to look at fundamentals (which is what this blogsite intends to provide) as well as technical analysis to see when to buy-in or sell-out.
- When an article in the news media picks up the trading patterns (of increased biotech stocks), you know that the pattern has already occurred and the news is history.
http://www.smh.com.au/news/business/biotechs-have-been-best-performers-since-1986/2007/01/11/1168105113648.html
- Don't be fooled - though the article claims that "biotech stocks are the best performers since 1986", it is true only if you picked the right one. From personal experience a gain of 200% or 300% is possible but so is a plunge to below 20%. Incidentally, the worst of my hi-tech/IT stocks have plunged to 0% or thereabouts, but I have not experienced such levels with biotech stocks. Once again - understand the company and its business and not follow the herd.
Below is a sample of stocks in my watchlist that have surged without good reasons:
CYN - 41c (intraday high 0.46 11Jan07) - between 32c to 36c last 3 months, even lower before that. Its involved in cord tissue banking business. I believe this to be a good stock and would buy if it is 30c.
CUV - from 48c to 81c from dec06 to Jan07 - it appears to be a turnaround story since 2006 but no specific news in Dec to warrant the surge. It develops compound agains UV-related skin disorders. May be covered by Tolhurst Noall.
BoD - from 9c Nov06 to 13c Jan07 - medical devices and implants
some of the stocks which have surged following product development are:
NRT - move to Ph3 Ovarian Cancer drug Nov06, US patent granted Dec06, from $2.60 to $3.10 within Jan 07
PYC - 30c Nov06 to 50c Dec06 - stroke drugs found new application
MBP - completes Ph2B obesity drug (results not fully analysed) - from 40c Oct06 to 1.10 Jan07 -
PLT - 10c Dec06 to 40c Jan07 - product (cervical cancer drug) penetrated China and South Korea - major turnaround for this embattled company which was 5c in Jul06.
MSB - clearance for Ph2 adult stem cell trials - $1.2 0Oct06 to $2.20 Jan06
PGL - $3.50 Nov06 to $5.50 Jan07 - announce liver cancer drug going to Ph3
The companies listed here may be overvalued or with the success of drugs factored into the price already.
- The Australian index is at all time highs despite recent corrections. This has been led by the resource boom of over 3 years followed by the steady growth of bank stocks. The market knows things have been over-priced and companies trading below their value are very difficult to find to invest in. Yet there is a continued growth in cash (eg from superannuation) looking for investment. Hence one of the sectors that have been shunned by main line investors is biotech. This is where money is starting to flow in.
- As an observer and analyst of biotech stocks over the last few years, I see the current increased trading to be exciting yet cautious. This beginning of a mini-boom in biotech stocks is going to make this sector even more volatile if recent trading pattern continues. The recent trading pattern in which some biotech stocks surge FNKMR - stocks are pushed up without any significant development in their product pipeline, changes in financial status or corporate activity.
- This serves to warn not to follow the market into biotech stocks. The serious biotech investor is encouraged to look at fundamentals (which is what this blogsite intends to provide) as well as technical analysis to see when to buy-in or sell-out.
- When an article in the news media picks up the trading patterns (of increased biotech stocks), you know that the pattern has already occurred and the news is history.
http://www.smh.com.au/news/business/biotechs-have-been-best-performers-since-1986/2007/01/11/1168105113648.html
- Don't be fooled - though the article claims that "biotech stocks are the best performers since 1986", it is true only if you picked the right one. From personal experience a gain of 200% or 300% is possible but so is a plunge to below 20%. Incidentally, the worst of my hi-tech/IT stocks have plunged to 0% or thereabouts, but I have not experienced such levels with biotech stocks. Once again - understand the company and its business and not follow the herd.
Below is a sample of stocks in my watchlist that have surged without good reasons:
CYN - 41c (intraday high 0.46 11Jan07) - between 32c to 36c last 3 months, even lower before that. Its involved in cord tissue banking business. I believe this to be a good stock and would buy if it is 30c.
CUV - from 48c to 81c from dec06 to Jan07 - it appears to be a turnaround story since 2006 but no specific news in Dec to warrant the surge. It develops compound agains UV-related skin disorders. May be covered by Tolhurst Noall.
BoD - from 9c Nov06 to 13c Jan07 - medical devices and implants
some of the stocks which have surged following product development are:
NRT - move to Ph3 Ovarian Cancer drug Nov06, US patent granted Dec06, from $2.60 to $3.10 within Jan 07
PYC - 30c Nov06 to 50c Dec06 - stroke drugs found new application
MBP - completes Ph2B obesity drug (results not fully analysed) - from 40c Oct06 to 1.10 Jan07 -
PLT - 10c Dec06 to 40c Jan07 - product (cervical cancer drug) penetrated China and South Korea - major turnaround for this embattled company which was 5c in Jul06.
MSB - clearance for Ph2 adult stem cell trials - $1.2 0Oct06 to $2.20 Jan06
PGL - $3.50 Nov06 to $5.50 Jan07 - announce liver cancer drug going to Ph3
The companies listed here may be overvalued or with the success of drugs factored into the price already.
Thursday, January 11, 2007
Sector Watch 070111 - CSG and Wine
Coal Seam Gas (CSG)
====================
What is it?
- is a natural gas formed as a by-product during the coalification process whereby organic matter is turned into coal.
- Coal seam gas (CSG) is usually methane in composition and is typically attached to the coal along its natural fractures and cleats. This gas is released when pressure on the coal seam is reduced, usually after water is removed from the seam.
(http://www.nrw.qld.gov.au/mines/petroleum_gas/csg/index.html)
Which Companies ?
QGC - Queensland Gas Co
AOE - Arrow Energy
SHG - Sunshine Gas
WCL - Westside Corporation
Performance? I started watching CSG 2 years ago, when the industry is still in its infancy. Even now, in terms of production, CSG is still a new source of gas, breaking into the market. However, recently it has attracted wider attention. I followed QGC and AOE when they were 40c and 30c respectively. These days they are trading at 1.35 and 1.20 - a return of 300% to 400% if an investment was made 2 years ago. Look at QGC and AOE amount of probable reserves - this may be an indicator to compare with other newer CSG companies.
QGC was recently pursued by Santos but made a deal with AGL instead. The pursuit by Santos has pushed QGC from 90c to $1.44. Interest generated by the takeover potential has also boosted AOE from 60C to 1.20. Currently QGC and AOE may have premium included in their prices.
Recommendation: QGC Hold, AOE Hold
SHG has potential and is not purely a CSG company - diversification may be its advantage here. It has not grown too much yet so there may still be value. WCL is just listed an operates on farmed out property from SHG. The farming out process may be in favour for SHG because it mitigates exploration and operational risks. If WCL is successful, SHG benefits without significant operational cost.
Detailed analysis on SHG is not done yet but is encouraged to compare its probable / proven reserves with QGC and AOE.
Recommendation: SHG Buy at 33c, Target 60c by 2008.
Wine Glut
==========
The wine glut caused by over-planting / harvest of grapes may have led to significant drop in wine prices and hence winery stocks recently. However there are a few positives about this wine glut to note:
- so far the grape harvest does not seem to be affected by the severe drought in Aust.
- low cost wine means it is available to a broader consumer base. When the price picks up (and it will) it may benefit from a bigger market.
- as the grape planting reduces - due to drought or farmers leaving the sector (poor performance recently) - the price of wine will pick up.
- in the present low priced environment, Aust wine is expanding its export market with significant growth to China (rising middle class) and also to the US (which may overtake Britain as our export destination). (Src: http://www.news.com.au/business/story/0,23636,21029613-462,00.html)
Watch: CWT
====================
What is it?
- is a natural gas formed as a by-product during the coalification process whereby organic matter is turned into coal.
- Coal seam gas (CSG) is usually methane in composition and is typically attached to the coal along its natural fractures and cleats. This gas is released when pressure on the coal seam is reduced, usually after water is removed from the seam.
(http://www.nrw.qld.gov.au/mines/petroleum_gas/csg/index.html)
Which Companies ?
QGC - Queensland Gas Co
AOE - Arrow Energy
SHG - Sunshine Gas
WCL - Westside Corporation
Performance? I started watching CSG 2 years ago, when the industry is still in its infancy. Even now, in terms of production, CSG is still a new source of gas, breaking into the market. However, recently it has attracted wider attention. I followed QGC and AOE when they were 40c and 30c respectively. These days they are trading at 1.35 and 1.20 - a return of 300% to 400% if an investment was made 2 years ago. Look at QGC and AOE amount of probable reserves - this may be an indicator to compare with other newer CSG companies.
QGC was recently pursued by Santos but made a deal with AGL instead. The pursuit by Santos has pushed QGC from 90c to $1.44. Interest generated by the takeover potential has also boosted AOE from 60C to 1.20. Currently QGC and AOE may have premium included in their prices.
Recommendation: QGC Hold, AOE Hold
SHG has potential and is not purely a CSG company - diversification may be its advantage here. It has not grown too much yet so there may still be value. WCL is just listed an operates on farmed out property from SHG. The farming out process may be in favour for SHG because it mitigates exploration and operational risks. If WCL is successful, SHG benefits without significant operational cost.
Detailed analysis on SHG is not done yet but is encouraged to compare its probable / proven reserves with QGC and AOE.
Recommendation: SHG Buy at 33c, Target 60c by 2008.
Wine Glut
==========
The wine glut caused by over-planting / harvest of grapes may have led to significant drop in wine prices and hence winery stocks recently. However there are a few positives about this wine glut to note:
- so far the grape harvest does not seem to be affected by the severe drought in Aust.
- low cost wine means it is available to a broader consumer base. When the price picks up (and it will) it may benefit from a bigger market.
- as the grape planting reduces - due to drought or farmers leaving the sector (poor performance recently) - the price of wine will pick up.
- in the present low priced environment, Aust wine is expanding its export market with significant growth to China (rising middle class) and also to the US (which may overtake Britain as our export destination). (Src: http://www.news.com.au/business/story/0,23636,21029613-462,00.html)
Watch: CWT
Wednesday, January 10, 2007
Links - this will be updated...
Here are some useful links for research into Australian stocks:
http://www.comsec.com.au
Free Online stock broker - with various tools
http://www.pckingsford.com/cykchee/SharesResearchForm.html
Access Comsec tools quickly (need to login to Comsec first)
http://www.australianinvestor.com.au/
Free info on Australian company news announcements
http://www.asx.com.au/
Australian stock exchange
http://www.news.com.au/business/
Company Research tool - find the little tool at the corner of this webpage
The next 4 links are from http://stockanalysis.blogspot.com
http://www.investopedia.com
Investopedia
http://www.investopedia.com/university/technical/
Investopedia - Technical Analysis
http://www.stockcharts.com/education/
Chart school
http://www.equis.com/Education/
Technical Analysis from A to Z, 2nd Edition
http://www.comsec.com.au
Free Online stock broker - with various tools
http://www.pckingsford.com/cykchee/SharesResearchForm.html
Access Comsec tools quickly (need to login to Comsec first)
http://www.australianinvestor.com.au/
Free info on Australian company news announcements
http://www.asx.com.au/
Australian stock exchange
http://www.news.com.au/business/
Company Research tool - find the little tool at the corner of this webpage
The next 4 links are from http://stockanalysis.blogspot.com
http://www.investopedia.com
Investopedia
http://www.investopedia.com/university/technical/
Investopedia - Technical Analysis
http://www.stockcharts.com/education/
Chart school
http://www.equis.com/Education/
Technical Analysis from A to Z, 2nd Edition
Introduction
This blog is created 9 Jan 2007.
Purpose: for opinion, news, analysis of Australian
stocks with a focus, but not limited to biotech companies.
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Tuesday, January 9, 2007
Morning Wrap 060109
Resources - especially copper and gold seem to be bringing the resource stocks down. This is affecting the general market which is down from opening at all time high at the start of the year. Bank stocks affected.
US dollar is weak - so there should be more demand in gold, unless supply is abundant.
Should this be leading to a general bigger fall, one of several safe categories could be biotech. An article on the SMH lists safe sectors as utilities, telcos, healthcare, food....
http://www.smh.com.au/news/business/analysts-cashing-up-see-reasons-to-be-nervous/2007/01/08/1168104920034.html
Watch biosignal... BOS
US dollar is weak - so there should be more demand in gold, unless supply is abundant.
Should this be leading to a general bigger fall, one of several safe categories could be biotech. An article on the SMH lists safe sectors as utilities, telcos, healthcare, food....
http://www.smh.com.au/news/business/analysts-cashing-up-see-reasons-to-be-nervous/2007/01/08/1168104920034.html
Watch biosignal... BOS
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