re: 1164.HK - Vital Biotech - Trading in HK - HK$0.64
Vital Biotech (1164.HK) – HK$ 0.64
HK listed biotech company with broad drug delivery expertise. Australian roots, main sales activity in the Greater China Region (particularly PRC)
vitalbiotech.com
Longterm Chart : finance.yahoo.com
The stock price exploded last week - but IMHO this is just the begining. Average trading volume is 5m shares recent trading around 20-50m a day.. Looks like some very good things - I'll touch them briefly - are going to happen here pretty soon..
Quote: 0.64 HK$ (SEHK) Shares Out : 1277m MCap : 815m HK$ (~ $108m US)
Revenue (6mt – 2003/06) : 125m HK$ (+93% y/y) Gross Margin : 70%
PSR (Price/Sales Ratio annualized) : 3,20
PE Ratio (6mt annualized) : 16
Debt / Equity : 0,5 Current Ratio : 2 ROA : 14,4% ROE : 22,9%
Valuation: Profitable biotech company with multiples unseen in “major” markets (US, Canada, Europe). Revenues growing 100% or more each year yet PSR is only around 3 and PE at 15.
Business Model: Vital Biotech in principle follows a Drug Delivery business model, where marketing of invented compounds and clinical trials are outsourced. However it tries to retain Greater China marketing rights for target candidates. Depending on upfront payment arrangements, this model can typically generate 5-20% of revenues in those market where marketing rights were sold.
Marketing Pipeline: Currently marketed compounds are Osteoform and Opin. The latter on a limited basis due to construction of a new GMP compliant facility to be completed 2004Q1. In the immediate future, 2003Q4 should see the following compounds are slated for introduction on the PRC market:
Depiles, Fenofibrate and Aceclofenac further diversifying the company’s revenue base.
Technologies: Company owns 2 drug delivery technologies: PSD (Protein Stabilisation & Delivery) and SDDS (thru Skin Drug Delivery System) to be potentially applied to a vast number of compounds.
Research Pipeline: among others EPO (Sublingual form) and Receptorase – details see below
Prime Investment Motivation: Very low valuation versus international peers, yet this profitable biotech company has huge revenue generating opportunities all around the globe. In light of the chosen business model – Vital’s EPO Project alone could be good for potential future royalty income of USD $400m-1bn per year, in light of the fact that 50% of the EPO ($10bn) market could be converted to a sublingual form and typical royalty shares for drug delivery entities of 8-20% of the final product revenues (according to industry sources). If any such a blockbuster deal indeed materializes, Vital could be a 10-bagger in the making |
