cheap as chips

Hi Everyone,

Every day that passes makes Biota and Relenza look better.
We now even had President Bush saying that he wants to see an increased production in Relenza.

I have been saying this before that even if GSK does not increase production of Relenza at the end Governments will force it to do so.

We are now reaching this point as Bush has asked also other nations to see to it that the production of Relenza increases.

GSK will be smart enough to play its part and ramp up production to the max.

Expect an out of court settlement at around the $200 million in November or earlier.

We now also have a USA goverment with Billions of dollars to spend on antivirals who will now have a closer look at this "spray" as Bush calls it.

Resistance of Tamiflu is now widely recognised and as such we can expect the USA goverment to buy a substancial amount of Relenza.

How much???

Probably at least half the amount of $4 billion dollars will be spend on Relenza.

This will be a tremendous boost for Biota and will turn this company in a serious cashed up Biotech with a proven track record.

Biota will catapult to become a mid size biotech with a tremendous amount of Cash that could be close to $300 million from the litigation , Relenza royalties and included $50 million cash holdings after the placement.

Besides the tremendous upside from the above we can anticipate a royalties stream of around the $50 to $70 million dollars if we look at a market share of $1 billion for Relenza for the next 3 years.

The market Cap of Biota will be many times higher then todays $215 million.

Looking at Cash holdings of say $300 million
Ongoing yearly royalties income from Relenza $70 million

shares on issue 180 million
cash holdings of each share $1.66

Earnings per share $0.39

Give the company a low P/E of say 18 gives us a share price of $7.02

Add the Cash component $1.66 + $7.02 = $8.68 per share.


With a share price of $8.68 we are basically back to where the share price when relenza was first released to the market.

But what has not been put in the share price is the value of the new generation antivirals that are close to be partnered off and ready to earn lucrative upfront licensing fees and ongoing fees based on achieving certain milestones

As being mentioned in the annual report Biota has a drug called RSV to fight the infant bronchiolitis where a competitor has just partnered off a smillar product for US$10 million on upfront fees and US$217 million when certain milestones are achieved.

Next to this drug Biota has another 3 antiviral products like the second generation Relenza, the HRV that fights the common cold and HCV the drug that fights Hepatitis C virus.

The above products are world class and will attract strong interest from pharmaceutical companies.


And now a re-cap.

We have now a potential value of $8.68 per share on the cash and income from Relenza alone.

How much value do you think can be added to the share price for these new products???


My conclusion is that at the closing price of $1.59 Biota looks very cheap........


Good luck


jojo

Do your own research and make up your own mind