RX - Biosyent

[LesPaul]

Noticed this filing in sedar for RX: NI 44-101 Notice of intent to qualify - English

 

http://sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00004638

what is it?

 

It looks like it would be a step towards raising cash through a short form prospectus which may or may not happen.

[snowball82]

http://finance.yahoo.com/news/biosyent-releases-q4-full-2014-130000405.html

 

I also love than ..."the Company has executed distribution agreements for FeraMAX® 150 and FeraMAX® Powder in 6 countries. To-date there are marketing authorizations in three of those countries...."

 

Biosyent is going to be an international plateform. Big pharmas should like than the company can market products in many countries vs only Canada.

[Crip1]

Granted that this has shown to be more volatile than larger caps, but it's now down more than 30% YTD and I've seen zero reason for this. Anyone know something that has not been reported in the mainstream business press?

 

 

-Crip

 

 

 

 

 

[snowball82]

Granted that this has shown to be more volatile than larger caps, but it's now down more than 30% YTD and I've seen zero reason for this. Anyone know something that has not been reported in the mainstream business press?

 

 

-Crip

 

Good morning Crip1,

 

I am not aware of news. Volatility is part of the game. The company has now  $ 8 million of cash and short-term investment.

 

Our focus should be to see how the international marketing plateform improves in 6 countries. If BioSyent is now active in keys markets in Asia, this could be game changer.

 

Do you have any idea what are these countries ?

[giofranchi]

snowball82,

 

how old is Mr. René C. Goehrum? And which kind of track record does he enjoy?

I have seen he has been a director of BioSyent since 1996… Almost 20 years… How is it that BioSyent is still a small company ($120 million in capitalization)?

Has Mr. Goehrum become a great compounder all of a sudden?

Or has some structural change occurred that helped unleash his business acumen?

 

Please, forgive me for the very basic questions, but I have started looking into RX just now. :)

 

Thank you,

 

Gio

 

[KCLarkin]

Has Mr. Goehrum become a great compounder all of a sudden?

Or has some structural change occurred that helped unleash his business acumen?

 

It is a good question Gio and I would like to hear more perspective on their history. The structural change is that they have switched from selling bio-friendly insecticides to in-licensing niche pharmaceuticals that are successful overseas but not available in Canada. So they switched from a bad horse to a good horse.

[giofranchi]

The structural change is that they have switched from selling bio-friendly insecticides to in-licensing niche pharmaceuticals that are successful overseas but not available in Canada. So they switched from a bad horse to a good horse.

 

Great! Thank you! :)

 

The question then imo becomes: why did it take Mr. Goehrum more than 10 years to switch from a bad horse to a good one?

 

Gio

 

[bz1516]

 

 

The question then imo becomes: why did it take Mr. Goehrum more than 10 years to switch from a bad horse to a good one?

 

Gio

 

For full disclosure, I have met Rene and spoke to him over the phone many times, but i don't think that is a good question. It's like asking some world acclaimed actor, "why did you toil in obscurity for so many years before you became a huge success.  Was there something wrong with you?"

[muscleman]

I am surprised that 9 pages of discussions have passed and no one has talked about accounting yet?

I only started to look into this today and I have a few notes here. Please let me know if I misunderstood any part here. I rarely look at Canadian companies.

1. 2014 Q3's trade receivable is over 1.3 bn, up 138% from 2013 Q4. But in the same 2014 Q3 report, income statement and cash flow statements are comparisons between 2014 Q3 and 2013 Q3. However balance sheet statement is 2014 Q3 vs 2013 Q4. That makes comparisons difficult. Is this a Canadian tradition, or it is on purpose to make account checks difficult?

2. 2014 Q4's trade receivable is suddenly back to 0.6 bn. Down nearly 50% from 2014 Q3. What happened? There was NO discussion by management about this at all.

3. 2014 Q4's disclosure shows that out of the 0.5 bn trade receivable in 2013 Q4, over 0.2 bn was paste due. That's a big percentage. Does that represent stuffing the channel to keep up the net income growth rate?

4. Inventory turn over has slowed down significantly. Finished Goods were 977,370 and 416,555 by 2014 Q4 and 2013 Q4. Cost of Goods Sold were 2,680,249 and 1,624,298. Therefore the turnover has decreased from 0.25 year to 0.36 year.

[Liberty]

Billions?

 

They shipped a big international order in Q3. These things are lumpy.

 

Listen to this:

 

 

[muscleman]

Billions?

 

They shipped a big international order in Q3. These things are lumpy.

 

Listen to this:

 

 

 

Big orders do make things more lumpy, but how about the slowdown in inventory turnover and the 0.2 bn paste due receivables? I can't imagine why it is not even discussed by management. The only discussion about it was that the credit risk should be low and they have never get any of the receivables defaulted by the customers. If you read "What's behind the numbers", that's the typical BS to cover the fact that management is stuffing the channels to keep up with Wall Street expectations.

[Liberty]

Billions?

 

They shipped a big international order in Q3. These things are lumpy.

 

Listen to this:

 

 

 

Big orders do make things more lumpy, but how about the slowdown in inventory turnover and the 0.2 bn paste due receivables? I can't imagine why it is not even discussed by management. The only discussion about it was that the credit risk should be low and they have never get any of the receivables defaulted by the customers. If you read "What's behind the numbers", that's the typical BS to cover the fact that management is stuffing the channels to keep up with Wall Street expectations.

 

I'd be more tempted to trust your attention to detail and look for answers if this wasn't a company that did $12 million in revenue in 2014 and that only recently got its first analyst covering it for the first time (so that "0.2 bn" and "wall street expectations" are not exactly a propos here).

 

A business growing at a CAGR of above 60% for the past few years and quintupling its number of products sold while also expanding internationally is going to see pretty big swings in all kinds of ratios and numbers. This isn't exactly a stable, flat business...

[snowball82]

Hi Gio, probably in the mid 50. Rene Goehrum has all my respect to have build this company so far. I love than the company "still at $ 120 M" as the market cap was less than $ 20 M three years ago. I prefer to look the futur earning power than what happened 15-20 years ago... So I don't have all the info I just read last 10 years of filling:) lol

 

 

[giofranchi]

For full disclosure, I have met Rene and spoke to him over the phone many times, but i don't think that is a good question. It's like asking some world acclaimed actor, "why did you toil in obscurity for so many years before you became a huge success.  Was there something wrong with you?"

 

Well… I don’t know anything about acting… But I know that business is not a lottery ticket!

 

Business, at least the kind that is investable to me, is a process that should be both understandable and repeatable. Those two features are required at the same time:

- If it is repeatable, meaning it has a long and convincing track record, but I cannot understand it, I would never muster enough confidence in its future;

- If I understand it, but it has no track record, I would never muster enough confidence its management could keep delivering outstanding results for a long time.

 

To hit the jackpot, or to find a gold mine, are one thing… luck might have played a huge role! To deliver outstanding results for many years is a completely different story: of course, the longer the track record the smaller the role played by luck alone.

 

In other words: have you a business process I can understand and judge very good? Have you already proven yourself for many years in the past? May I partner with you at a fair price? I need 3 YES! ;)

 

Therefore, I ask again: how old is Mr. Goehrum? And no track record before 2010?

 

Thank you,

 

Gio

 

[giofranchi]

Hi Gio, probably in the mid 50.

 

Ok! Thank you! :)

 

I prefer to look the futur earning power than what happened 15-20 years ago... So I don't have all the info I just read last 10 years of filling:) lol

 

That of course is the “understandable” part of the equation… And I like Biosyent’s business a lot! ;)

 

Now I would like to know about the “repeatable” part a little bit more: you have read the last 10 years of filings, right? If so, could you tell us what happened from 2004 until 2009? 5 years of no revenue growth, nor any earnings to speak of… Then all of a sudden revenue start increasing at a compound quarterly growth rate of nearly 30%!… Why? Which are the changes Mr. Goehrum implemented? From the reading of those filings did you get the idea it was a well thought out and precisely executed plan, that just took some time to bear fruit, or something Mr. Goehrum encountered almost by chance?

 

I would appreciate whatever color you could put on this story.

 

Cheers,

 

Gio

 

[snowball82]

Gui, they than start a the in licencing business model they have today. The growth will continue, not just on the international front. Not just for Feramax. I love Cathegel product and Repagyn ©The last analyst report (April 6) demonstrate than the vaginal dryness in Canada is approximately double the iron deficiency market. " RepaGyn® has the potential to become a key player as it offers a unique alternative to hormone-based therapy."

 

Hope that helps.

[gary17]

Gio

I think if you like good track record you can look at Knight Therapeutics -  Mr. Goodman successfully created Paladin and is now running GUD - basically Paladin 2.0.    On RX, I think I have a lot of respect for Rene as he has helped created a lot of wealth for the society in the last few years - probably more so than many board members here and that deserves respect.  If his sudden realization to implement the specialty pharma business model doesn't meet your criteria... you don't need to be in.    I know RX has done better than LRE over the last 3 years - not that this is guaranteed , but I think it is important to keep an open mind and be flexible as Sir John Templeton had said :)    my  2 cents.

Gary

[giofranchi]

Gui, they than start a the in licencing business model they have today. The growth will continue

 

snowball,

I don’t doubt it… But I would like to see it more clearly!

How and why did they start the licensing business model? Why not before? It is not like it was brought in by a new management… Therefore, something else must have occurred. But what exactly? Was it just opportunistic behavior? Something good came their way, and they grabbed it in order to change the business model? Or was it carefully studied and planned for a long time, before it finally turned into reality? Did Mr. Goehrum already know the licensing business model, and already managed it for some other company, or is this the first time he is involved with it?

Imo when you are paying a very high multiple of sales for a company, you must know the answers to those questions… at the very least! ;)

 

Gio

 

[giofranchi]

Gio

I think if you like good track record you can look at Knight Therapeutics -  Mr. Goodman successfully created Paladin and is now running GUD - basically Paladin 2.0. 

 

I will surely take a look at it!

 

Thank you, Gary :)

 

Gio

[KCLarkin]

Looks like recent drop is related to a new generic version of FeraMAX:

http://www.odanlab.com/EN/News_Releases.asp?id=298

http://www.cantechletter.com/2015/04/buy-biosyent-on-weakness-says-cantor-fitzgerald-canada/

 

 

[muscleman]

Looks like recent drop is related to a new generic version of FeraMAX:

http://www.odanlab.com/EN/News_Releases.asp?id=298

http://www.cantechletter.com/2015/04/buy-biosyent-on-weakness-says-cantor-fitzgerald-canada/

 

What's your take on this news? This stock is currently richly priced for perfection, so negative developments like this definitely would drag down the stock quite a bit.

I felt like this stock has been heavily pumped for the past two years, and people easily dismiss all accounting red flags as "It is a small company so things are definitely volatile." That makes me a bit concerned.

 

“In our opinion, new generic competitors do not pose a serious threat due to: lack of reimbursement, lack of availability, and lack of promotion”. Does this explanation make sense? I am not quite convinced. If your best argument against competition is "Don't worry, they are lack of promotion and availability", that sounds more like admitting defeat.

 

 

 

[muscleman]

Gio, why don't you call Biosyent's CEO and talk? I think a few members of this forum have talked to the CEO and felt impressed.

 

I am continuing to do some research and I may decide to call him at some point regarding the accounting questions.

[muscleman]

What do you guys think is RX's competitive advantage? They basically license niche products from other pharmas, make and sell them. Is there a high barrier of entry for other small competitors to do the same?

[giofranchi]

Gio, why don't you call Biosyent's CEO and talk? I think a few members of this forum have talked to the CEO and felt impressed.

 

I find talking at the phone with management to be useless at best, maybe even misleading… And I surely would never base an investment of mine on a chat at the phone!

 

Truth is I need a track record of many years. Period.

 

Take care of the downside, and the upside will take care of itself... That sort of things, you know.

 

If I lose some great opportunities, so be it!… Fortunately, the world is a big place, and sooner or later some other very good opportunity will probably come my way (Knight Therapeutics maybe? We will see! ;)).

 

Cheers,

 

Gio

 

[giofranchi]

But I will surely keep on looking at RX!

If Mr. Goehrum is in the mid 50s, and he truly is a great entrepreneur, five years from now he will be 60, and RX might have become a billion dollar company. At that point Mr. Goehrum will finally have a very solid track record, might still have 20 years in front of himself to keep building much more value, and RX would still be a relatively small company (lots of room to grow).

That, coupled with a fair price, would be imo the perfect investment… truly my sweet spot! ;)

 

Cheers,

 

Gio