The fact that this brokers could not differentiate Peter Classic news from facts speaks volume of the objectivity of the broker’s buy recommendation.
Facts from the AGM document: Page 18 Line 1 : Quote “At the end of September our cash stood at $55 million.” End of Quote BTA announced on 14 Oct 08, there are 174,563,999 shares. Therefore cash per share is 31.5 cents
With no significant income or sales reported in October and November, through sheer magic, the broker predicted the cash balance somehow grew by more than 10%. This is mind boggling mathematics. On 30 June 08 the cash balance was $60.2M. Despite receiving the GSK $20M settlement payment in August, the cash balance fell to $55 million at the end of September.
$4.95 M were spent on the share buyback ($7.953M less $3.0M in 07/08FY) This imply that in the 3 months from 1 July to 30 Sept, Biota burned approximately $20.25M cash ($60.2M + $20M - $55M- $4.95M). At this underlying rate of cash burnt, and no report of significant sales or income, the broker predicted the $55M cash at the end of September (31.5 cents per share) grew into 34 cents per share in November report!!
The 1st quarter royalties was $1.9M. The broker predicted a $22.9M annual royalty which is in excess of 12 times the 1st quarter royalties. What is even more amazing is the prediction is based on Relenza capturing 25% market share. Currently it has less than 5% of the market share.
The broker is so impressed that he promoted Biota as Quote “a Company with demonstrable expertise in drug developments, partnering and commercialisation”.End of Quote. Relenza is superior to Tamiflu. It beat Tamiflu to market, by as much as 3 years in some market. Despite these massive advantages, Biota “demonstrable expertise in partnering and commercialisation” resulted in a 5% market share while Tamiflu captured 95%.
BTA Price at posting:
36.5¢ Sentiment: Sell Disclosure: Not Held
