RX - Biosyent

[chmith]

 

Quote from: rohitc99 on August 11, 2015, 09:40:41 AM

As per my understanding, Cathejell is expected to be a 1-1.5 Mn product, repagyn 3 Mn and proktis M in the range of 1.5 Mn. So collectively they could add to the growth, but not by a substantial amount. Feramax is still the key in the medium term.

I dont have an idea on the Aguettant systems ..maybe that will add to the topline further ?

 

 

Thanks Snowball - I did read everything published by the company but still haven't got any info on absolute size of any of the other products, that was really what I found more interesting with regards to the quote above. I am still wondering to what extent this company is a one-product (albeit a very successful one) wonder.

 

 

 

[snowball82]

Quote from: rohitc99 on August 11, 2015, 09:40:41 AM

As per my understanding, Cathejell is expected to be a 1-1.5 Mn product, repagyn 3 Mn and proktis M in the range of 1.5 Mn. So collectively they could add to the growth, but not by a substantial amount. Feramax is still the key in the medium term.

I dont have an idea on the Aguettant systems ..maybe that will add to the topline further ?

 

 

Thanks Snowball - I did read everything published by the company but still haven't got any info on absolute size of any of the other products, that was really what I found more interesting with regards to the quote above. I am still wondering to what extent this company is a one-product (albeit a very successful one) wonder.

 

Welcome R, the only one report I read about it is Cantor's one. If I remember well they wrote the current funnel was $ 50 M sales at peak potential (to verify and was before the last announce).

 

[snowball82]

Impressive growth, terrific ROE. Do you think the growth will continue and sales from 9 other countries/markets than Canada be significant soon ?;)

 

BIOSYENT NAMED TO THE PROFIT 500 RANKING OF CANADA’S FASTEST- GROWING COMPANIES WITH A FIVE-YEAR REVENUE GROWTH RATE OF 1,086%

FOR IMMEDIATE RELEASE SEPTEMBER 17, 2015

TORONTO, ONTARIO (September 17, 2015) BioSyent Inc. (“BioSyent”, TSX Venture: RX) is pleased to announce that Canadian Business and PROFIT today named BioSyent to the 27th annual PROFIT 500, the definitive ranking of Canada’s Fastest-Growing Companies. Published in the October issue of Canadian Business and at PROFITguide.com, the PROFIT 500 ranks Canadian businesses by their five-year revenue growth.

Based on a five-year revenue growth rate of 1,086% (2009-2014), BioSyent ranked 64th on the 2015 PROFIT 500 list. This is the third consecutive year that BioSyent has been named to the PROFIT 500 list and marks a significant increase in the Company’s five-year revenue growth rate, from 608% on last year’s list to 1,086% on this year’s list.

“We are pleased to be named to the PROFIT 500 list again” commented René Goehrum, President and CEO of BioSyent. “We continue to build our brand portfolio with innovative products that will fuel our growth for years to come.”

 

[greenbriar]

Why do these guys not shut down or spin off their legacy insecticide division?  Seems like going forward, it's just a distraction.

[Liberty]

Why do these guys not shut down or spin off their legacy insecticide division?  Seems like going forward, it's just a distraction.

 

Maybe they haven't found a buyer? Maybe it's so low maintenance and takes so little management time that it acts as kind of an annuity, so they're not in a hurry (ie. If they don't change the product, no need for much reinvestment, and they don't manufacture it themselves).

 

But I agree, sounds like it would probably be best to divest if they can get a decent price for it.

[snowball82]

Thanks Snowball - I did read everything published by the company but still haven't got any info on absolute size of any of the other products, that was really what I found more interesting with regards to the quote above. I am still wondering to what extent this company is a one-product (albeit a very successful one) wonder.

 

Welcome, you can now add Cysview potential. The potential for Cysview is 25 000 bladder cancer resections (TURBs) each year. Maybe more if Photocure can get an approval for other application later.

 

Biosyent market position within hospital/urology division is improving. IMO

[snowball82]

I met the management recently and -reading between lines + like they wrote in last last Q results- Repagyn seems doing well.

 

http://www.repagyn.ca

 

Very interesting to see Cysview and Repagyn potential added to Feramax.

 

What do you think will be peak Biosyent sales for these products ?

 

 

 

[snowball82]

Excellent Q results again this morning.

 

Do we know another cy increasing marketing expenses + 30 % and still get a 40 % ROE without debt  (and that % in cash/ short term investment)?

 

http://www.marketwired.com/press-release/biosyent-releases-results-for-third-quarter-and-first-nine-months-of-2015-tsx-venture-rx-2072614.htm

 

 

 

 

[Yours Truly]

Great numbers yet again but market doesn't seem to like them.  Oh well! :)

[KCLarkin]

40 % ROE without debt

 

The actual economics are even better, given all the excess cash.

[rpadebet]

40 % ROE without debt

 

The actual economics are even better, given all the excess cash.

 

+1

 

They are earning this with just 3m of actual invested capital. I hope no potential competitor sees this.

[snowball82]

40 % ROE without debt

 

The actual economics are even better, given all the excess cash.

 

I agree that's why I wrote with that % in cash/ short term investment:)

 

Now we can see a new thing in the futur pipeline. I have never seen it before for Biosyent.

 

Future Product Pipeline

In August 2015, the Company appointed a Vice President, Corporate Development to enhance and

accelerate the sourcing of new products.

The Company is currently in discussions with several potential partners for other new product

opportunities. While most of these products are in the prescription drug category, some, although launched

in other markets, may require additional investment before launching them in Canada. The Company is

evaluating the risk of the additional investments such as bio-equivalency studies, clinical studies and studies

to evaluate interactions with other drugs and is contemplating accelerating its business development

pipeline by undertaking such development activities.

 

[Drokos]

I might take some flack for this, but I have actually soured a little on Biosyent over the last year or so. A few reasons:

 

-Poor disclosure. No one has any idea how much each product contributes, impossible to know the product concentration or sales opportunity for the products. Getting a Cysview peak sales estimate this quarter was a start in the right direction, but not nearly enough transparency.

-Inconsistent(and low) growth over the last 5 quarters.

-Misleading press releases when the numbers don't look good. Anyone read the Q2 release? The Q2 numbers were weak so Rene only wrote about the 1H numbers. The Q2 EPS was not mentioned anywhere in the release. Q2 sales were only in the table, not mentioned in the text like every other quarter (and every other company).

-Valuation isn't compelling. Annualizing Q3, you've got $0.32 of EPS, on a stock price of $7 (or $6.50 ex cash). 20-22x EPS. Other growing specialty pharma companies are currently trading at 10x EPS or less, so there is significant downside potential. Even if Biosyent doubles earnings, its possible the multiple contracts closer to the peer group and your stock return is minimal.

 

Of course if the business really can continue to grow earnings at 30% for the next 5 years, everything will work out fine, but its a bit blind faith in Rene. He hasn't put the cash to work very quickly, only doing tiny deals that take years to ramp up. What if Feramax stops growing? even if the other tiny products keep growing it will halt earnings growth in a hurry. Rene has had some good success the last couple years, but remember this guy ran the old dog of a business nearly into the ground for 10+ years.

 

I've been a holder for 2+ years, so I am willing to be patient and wait, but I am putting Rene on a shorter leash, especially with more established companies with better disclosures and more reliable growth trading at half the valuation of Biosyent.

 

 

Q1 2014: 0.04

Q2 2014: 0.06

Q3 2014: 0.07

 

It looked like we were going at a great pace, and Rene would have had you believed that what going to continue for the foreseeable future because all products were in the "product launch/rapid growth" buckets. But clearly that didn't happen:

 

Q4 2014: 0.05

Q1 2015: 0.07

Q2 2015: 0.06

Q3 2015: 0.08

 

It was essentially a lost year, we are only now back to the 7-8 cents per Q run rate. I don't feel like Rene gave enough explanation of the hiccups. Just 'a big order got delayed from Q2 to Q3'. If that were the case, and the order was worth 0.01 of EPS, that would mean we just posted three straight quarters of 0.07. Not exactly the compelling growth we were promised.

 

 

 

 

[KCLarkin]

RX is certainly expensive but I assume any specialty pharma trading at 10x either has lots of debt or a patent cliff?

[snowball82]

RX is certainly expensive but I assume any specialty pharma trading at 10x either has lots of debt or a patent cliff?

 

I am also interested to know a comparable specialty pharma like Biosyent but trading at 10x P/E without debt.

 

Many investors have very hight growth expectation for companies in their portfolio. You can't get + 50 % EPS growth  forever. Take a minute to think they added 50 % more staff, increased marketing expenses by 30 % and added new products and still so profitable over last months.   

 

 

[Drokos]

Most other pharma companies due carry debt since they seem to understand capital allocation and pharmaceuticals are not very cyclical. But if you are trying to take the capital structure into account, just use a EV/EBTIDA multiple. Biosyent is at what, 20x?

 

TEVA, ENDP, MNK, VRX, LCI, etc are all at 10x EV/EBITDA or less and are growing. Biosyent's tax rate is higher too, so less of its EBITDA is converted to free cash flow. So it should inf act trade a lower EBITDA multiple, all else equal.

 

I am interested to hear what makes Biosyent's growth prospects so superior? Because management has stated so? The company has no internal pipeline, has apparently in-licensed a couple unnamed products, but hasn't given many details. It also hasn't disclosed whether growth is coming from volume vs price, etc. Maybe it will continue to grow 30-50%, but I believe those numbers are more rooted is hope than in hard math. I doubt anyone is doing a bottom up analysis of each drugs prospects and realistic peak sales, mostly because the company doesn't even provide enough information to do that.

[KCLarkin]

I don't think any of the names you mentioned have 28% organic growth with 40% ROE. Those are the kind of numbers get priced with a lot of hope. But this is basically a one product company. Very high risk.

[snowball82]

Most other pharma companies due carry debt since they seem to understand capital allocation and pharmaceuticals are not very cyclical. But if you are trying to take the capital structure into account, just use a EV/EBTIDA multiple. Biosyent is at what, 20x?

 

TEVA, ENDP, MNK, VRX, LCI, etc are all at 10x EV/EBITDA or less and are growing. Biosyent's tax rate is higher too, so less of its EBITDA is converted to free cash flow. So it should inf act trade a lower EBITDA multiple, all else equal.

 

I am interested to hear what makes Biosyent's growth prospects so superior? Because management has stated so? The company has no internal pipeline,

 

TEVA, ENDP, MNK, VRX, LCI

 

Most other pharma companies due carry debt since they seem to understand capital allocation and pharmaceuticals are not very cyclical. But if you are trying to take the capital structure into account, just use a EV/EBTIDA multiple. Biosyent is at what, 20x?

 

TEVA, ENDP, MNK, VRX, LCI, etc are all at 10x EV/EBITDA or less and are growing. Biosyent's tax rate is higher too, so less of its EBITDA is converted to free cash flow. So it should inf act trade a lower EBITDA multiple, all else equal.

 

I am interested to hear what makes Biosyent's growth prospects so superior? Because management has stated so? The company has no internal pipeline, has apparently in-licensed a couple unnamed products, but hasn't given many details. It also hasn't disclosed whether growth is coming from volume vs price, etc. Maybe it will continue to grow 30-50%, but I believe those numbers are more rooted is hope than in hard math. I doubt anyone is doing a bottom up analysis of each drugs prospects and realistic peak sales, mostl

 

Drokos,

You probably underestimated the strength of the management for capital allocation. Sometime the best capital allocation is to stay cash and wait for the right deal and get the right ROC. With your assumption you could deduct Knight therapeutics management aren't doing a good job to have more than $ 400 M in cash or quasi-cash (vs  less than $ 9 M for Biosyent). As shareholders we should encourage the management to wait for the right deal - the right pitch if you like analogy with baseball- and not put pressure to follow the institutional imperative to be bigger at any price. Did you calculate the ROIC without cash for Biosyent ? :)

 

I appreciate new companies names you add here but as you know there's

many differences between Microcap and large cap we should take into consideration when you do comparison between a $ 50 B company vs a $ 100 M microcap like Biosyent :)

 

So growth potential for Biosyent is many times superior than a large cap with 3-7 % growth. The CEO guidance is many times that %, it's 30 % growth per year.

 

Biosyent has 9 products marketed and to come :

 

Feramax 150

Feramax powder

RepaGyn

Cathegel Jelly

Aguettant system

ProktisM

Cysview

2 urgent care products / Health Canada pending approval

 

We can see the Repagyn unit growth was + 44 % over last quarter. 12 % compound growth per month. 48 % growth for Cathegel. 100 % growth for international sales year over year. Cysview product alone has a huge potential and should contribute during 2016 as it been approved by Health Canada.

 

[rohitc99]

The following is my break up of the products based some of my calculations from the annual reports

Feramax 150 : ~ 10 Mn, growing at 18% as per latest Q

Feramax powder : ~ 1 Mn or less, growing at 30-40%

All other products ~ 1Mn, growing at 40%+

Feramax exports ??

 

Repagyn has potential of around 2-4 Mn, Cathejell ~ 1 Mn, Proktis ~ 1-2 Mn. I got the potential from my conversation with the management. They are easy to reach and open to talking to investors. cysview is 4-6 Mn.

 

So in all if they are successful in all the non feramax products , they have a potential of 10-11 Mn (versus 12 Mn sales in 2014). Feramax exports is in addition to that.

 

Also it seems they still want to use the cash to keep license new brands  and use the cash for that. once they reach a certain scale, the plan is to 'buy' some the brands (the term used by them was farming versus hunting)

 

So i think, RX is not really comparable to other specialty pharma. They are still a one product company (hence higher risk), which is now using those cash flows to setup a marketing/distribution for the new channels such as hospitals, women's healthcare etc. As per their recent Q, they also have someone now to source new products.

 

RX is more a bet on management that they will be successful in setting a pipeline in place to source and sell various third party brands over time with increasing volumes. They seem to doing fine for now ...going long is a bet that they will successful at it.

 

 

 

 

[snowball82]

Interesting to see that difference about possible global sales vs report from Cantor Fitzgerald Canada analyst Scott Curtis, January 2015. In addition to what we know since -the 100 % growth for international sales and addition of Cysview product and others- they wrote the guidance from management suggests the present funnel of opportunities amounts to $50 million of annual sales (at peak penetration).

 

Edit : Sorry for my mistake, I change my formulation about funnel opportunities (January 2015). My sincere excuses to rohitc99 for that.

 

 

 

 

 

[rohitc99]

Interesting to see that huge difference vs report from Cantor Fitzgerald Canada analyst Scott Curtis.

Before the 100 % growth for international sales and addition of Cysview product and futur others, they wrote the peak should be $ 50 M.

 

i could be wrong here ...this is what i got from them. i dont have Aguettant systems in this

[snowball82]

It could be useful if we could have an update from the analyst at Cantor after Cysview annouce.

I personally think the estimate from the management is low for Cysview. If the technology is effective like Photocure said, there no reason they couldn't get more market share. IMO

[gary17]

IMO  RX is 'fairly' valued for the FeraMAX 1 product - and you get the cash & a management team with a number of products coming online - it's a bet if more value can be created from those products in the pipeline. 

 

I really like they are using the cash they have to conservatively do this rather than raising equity and/or debt.

 

I love RX at this price point.  same with GUD -  mostly cash, waiting patiently for more development.

 

Gary

[snowball82]

IMO  RX is 'fairly' valued for the FeraMAX 1 product - and you get the cash & a management team with a number of products coming online - it's a bet if more value can be created from those products in the pipeline. 

 

I really like they are using the cash they have to conservatively do this rather than raising equity and/or debt.

 

I love RX at this price point.  same with GUD -  mostly cash, waiting patiently for more development.

 

Gary

 

Same here Mr Gary. I think investors will see value for each product over time and, per exemple, why Cysview is a strategic addition for Biosyent Hospital division and something transformative for specialists doctors and PATIENTS. I got some private questions about Cysview, so maybe this could help for others participants here (from Photocure last annual report) :

 

Note : Take also notes about surveillance potential.

 

"HEXVIX®/CYSVIEW® – THE INNOVATIVE

PRODUCT FOR IMPROVED

DETECTION AND MANAGEMENT OF

BLADDER CANCER

Hexvix/Cysview is the first significant

advance for the improved detection and

management of bladder cancer. It is

designed to induce specific fluorescence in

the malignant cells in the bladder during

a cystoscopic procedure, making it easier

for the urologist to detect and treat bladder

cancer. Hexvix was approved in most

European markets by 2005 and as Cysview

in the US in 2010. Hexvix was initially

approved based on strong clinical data

showing improved detection of bladder

cancer. New clinical data have shown that

improved detection using Hexvix/Cysview

makes local surgery more complete and

leads to improved patient management

and a significant increase in the time to

recurrence of bladder cancer. Based on

this, Hexvix/Cysview has the potential to

transform the diagnosis and management

of bladder cancer and significantly improve

patient outcomes including reduced tumor

recurrence and quality of life as well as

disease free survival.

Following regulatory approval of the broader

indication of use of Hexvix by European

authorities in 2013, the European Association

of Urology guidelines on non-muscle

invasive bladder cancer have been updated

and have strengthened the recommendation

on the use of Hexvix photodynamic

diagnosis. The broader indication of use

and updated guidelines both recognize

the positive impact of Hexvix on reducing

recurrence rate and improving time to

recurrence of bladder cancer. In 2014

expert recommendations on the clinical

and cost effectiveness of Hexvix/Cysview

have been published in European Urology

and Nature Reviews Urology.

An expansion of the use of Hexvix/Cysview

into the flexible surveillance patient

segment will open a market segment which

is estimated to be 2-3 times the size of the

current TURB/OR segment. Following

positive early clinical experience with

flexible cystoscopes in 2014, Photocure

will initiate a phase 3 clinical study with

360 patients for examining improved

detection rates of Cysview blue light

cystoscopy vs white light cystoscopy. The

study design is in alignment with FDA

to obtain label extension and fulfill the

Cysview post marketing commitments.

Patient recruitment is planned to start 3Q

2015, with final results expected in 2017

and possible approval in 2018. In addition

to the registration study Photocure

will generate additional clinical data by

supporting Investigator Initiated Trials.

In January 2015 a study on the impact

of Hexvix on survival in bladder cancer

patients was published in the World Journal

of Urology. The findings from this study

demonstrate that Hexvix guided TURBT

in bladder cancer patients, who later

progressed to requiring radical cystectomy,

significantly increased the three year overall

survival and the median three year recurrence

free survival.

 

https://www.photocure.com/Global/Investor-relations/Annual%20Reports/PHO%20Annual%20Report%202014.pdf

 

[rohitc99]

i am thinking more of the company as a platform or channel - hospital division, women's health etc. If they can develop these platforms or channels well (they are still in process, so i guess jury is out on it), then each product is not as critical. It then becomes vehicle for sourcing and selling new products through this pipe.

 

i guess in my mind, if i look at this company as a seller of feramax, then it is overvalued and risky. If they can make this transition to building all these channel as other companies have done, then its a different matter