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

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.

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