2014 and beyond

2014 clearly shapes as a massive year for BOTA.

Assuming that the results expected mid-year are good, a re-rating seems inevitable notwithstanding the acknowledged uncertainty about the ROW Lani split.

Looking further forward, I have no doubt that Plumb is setting up BOTA as a cash cow ready to be flogged off. In this regard:

1. The number of directors and their associated emoluments has been culled.

2. Operating costs/overheads have been pared back considerably.

3. All of Cook's 'legacy' has been unwound including decommissioning programs without a very clear future.

4. All of this has occurred against a background of increased BARDA revenues and stockpiling renewals that inevitably draw closer.

To place a figure on what BOTA may be worth down the track to a potential buyer is obviously not possible at this stage. However, on an assumption of future revenue generation of a very modest $50 million per annum it is very interesting to look at the sums produced by the application of different P/E multiples.

The norm for most American pharmaceuticals is to trade around 20 times earnings which on present prices would place a potential market cap on BOTA of $1 billion representing a share price of $35.27 US (or about $39.59 AUS at the present exchange rate).

However, for those who really like to dream on a New Year's Day, the P/E figures for some American pharmaceuticals are quite extraordinary. For example, in ascending order:

- Sun Pharma Industries Inc P/E: 62
- Roche Holdings AG P/E: 262
- Gilead Sciences Inc P/E: 534
- Shire PLC P/E: 2,423

Like others, I have been critical of management in the past but to me the future looks bright and I am looking forward to hanging on for the ride.

Happy New Year and good luck to all!