and 7 months later .....

WA News / Lee Griffith
January 1, 2010, 10:02 am

Phylogica shareholders have received a boost after a New York equity research house labelled the fledgling Perth biotech undervalued and predicted a 51 per cent share price rise over the next year.

RB Milestone Group said Phylogica was trading at price-to-sales ratio much lower than its Australian peers, including BioPharmica and Progen Pharmaceuticals, which averaged a P/S ratio of 1.09 times their 2009 sales. Phylogica, however, was trading at only 0.1 times its 2009 revenue (made up of grants) of $1.3 million.

But after a deal with pharmaceutical major Roche last month to use the company's Subiaco-based molecule library to help develop smarter drugs, RB Milestone said Phylogica's equity had scope to appreciate.

"Considering the growth prospects of the company it seems to be trading at cheap valuations resulting in upside potential for the stock," RB Milestone wrote. "If we assign the group average P/S of two times the 2009 sales for the company, we arrive at a one-year target price of 20.4."

Phylogica shares were unchanged at 13.5 yesterday. The stock has recovered since plummeting to 5 in July.

In an agreement signed last night, Roche said it would analyse Phylogica's protein library to try to help improve the delivery of its biologic drugs into patients' cells. Biologic drugs are a fast-growing sector of drug development, making up 30 per cent of all drugs, and 2008 sales from 14 pharmaceutical majors hit $US500 million ($555 million) in 2008.

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20.4c sounds pretty good right now !