Analysis - POH - Phosphagenics Limited

Source: http://ozstock.blogspot.com

Summary Metrics:
Price($)        0.07
NTA ($)        0.02
P/NTA        4.4
Team        6.1
BurnPeriod      2.45 / half year
ProductPipe     11.1
ForeignMarket   2.5
Cash:Debt       Debt Free


Opinion: Buy up to 12c.

Discussion:
In POH's own words, the company does "Production, sale and licensing of products for the nutraceutical and  pharmaceutical industries."

POH is different from other biotech startups in a few ways. Firstly, it is not a developing any block buster drug that cures diseases. Instead it develops and owns technologies for drug delivery that are Transdermal, Dermal and Oral (Phospha E, TPM). Secondly it reports every half year which differs from the majority of biotech which reports quarterly.

It has at least 2 products in Phase II, several more in Phase I and more in Preclinical. This lead to a very high Product Pipe score of 11.1 where a score of 5 or 6 is regarded quite good. It had sign agreements with local biotechs such as CSL and Metabolics. In Nov 2009, it announced the launch of an anti-aging product by its US partner which uses POH's TPM delivering technology.

In terms of Foreign markets, POH demonstrated penetration into the US market. It has deals with at least one major US company, and an office in the US. However, there seems to be no other foreign market associations than the US hence its relatively low Foreign Market score of 2.5

POH has a solid management team as shown by the high score of 6.1. In such biotechs, a higher score is placed on scientific qualifications of the directors. In POH's case, an additional positive fact is that the management / directors team seem to be quite stable with little turnaround over the last 3 years.

In terms of financials, POH is debt free for the last 3 years. It has a very high Intangible Assets, however this is to be expected from the nature of business of POH. The Price to NTA is a little over the comfort zone, coming in at 4.4, but the other positive factors outweigh the high price ratio. Its burn period of 2.45 / half year means a survival time of about 1.5 years. But note that this number is currently based on the half year cash flow results. Looking at the previous years record, the full year (annual) cash burn rate seems to be lower than this, hence its burn rate is not too bad.

From a technical point of view, over the last year, POH has peaked at about 19c in April 2009 but since then has plummetted to current levels. It has been steady above 6c for more than two months and is showing a slight tendency of an upward trend. If the 6c level might be the support level which marks the beginning of accumulation in the stock.

Fundamentally and technically it appears that the future of POH is on the way up.