Scigen has been on the market for over two weeks now and has of today come out of deferred trading. During this period I have been observing the trading pattern and also doing some in depth analysis of what the company is all about. I must say that I am extremely impressed with what I see. It is only in the last couple of weeks because it was deferred delivery and also that remember the fact that sie came from Sonic spin out which means that there are a number of institutions with sie shares that do not fit in their investment portfolio, and had to be rid of. The last 2 days we see huge volumes going thru, at more than 100million shares. It looks to me that we are close to the end if not already there. Another possible reason is that the way that sie is structured, being a Singaporean company that there may be ineligible holders and again the shares need to be disposed of. Initially when it started trading in the first week we saw it trading up to 8 cents before the selling comes in but last 2 days I felt that it has turned and found support at the 5cents level trending higher. I also checked yesterday that there were offshore buyers yesterday in sie, probably from Singapore. Sie really reminded me of Uni which had a slow start down to 22cents and then all the way up to over a dollar. Sie can see similar trend.
Now on the more fundamentals, I like sie because of its industry. It is not pure biotech in the sense that its business is not solely researching new products which could take years and years and run out of money. On the issue of money sie has considerable funds at the moment since it has just been floated out and Sonic injected a few million dollar of cash. Another issue that I like is the company only have a handful of employees, less than 30 I recall, so burnout rate of cash should be contained at least for the medium term.
Sie is not pure biotech. It is in the generic pharmaceutical product market meaning that it acquires licence for patents of recognised medication that has expired (basically what it means is that when a new medication is discovered there is a fixed time that the medicine could be protected say 20 years, which means the original discovery could be sold under a specific brand but once the protection is over, other companies can come in and manaufacture similar medication, cheaper under a generic name example an Amcal brand).
When you go to a chemist these days and ask for a presciption say high blood pressure medication prescribed by a doctor, you will notice that the pharmacist will always now ask if you want a generic brand id the price is lower. Inevitably I always go for the generic. Some of you may not for fear for inferior quality- and perhaps that might be the only downside for sie- to change the perception. However we can argue always this problem if we look at the market that sie is operating in.
Pure research of a new medication can take years and years on discovery, clinical trials, human trials and regulatory approvals. Sie cuts out many of these steps so it can take say two years to bring a generic medication into a new market. Yes they still need to get approvals but you can see that as the original medication has been used for some years, it will be easier to get them into new markets under cheaper and different brands.
Son ic has had sie for a number of years and therefore company very well developed and we are at the marketing phase ie when we can see cash in the medium term which is a potential driver of share price. Obviously in the scheme of things sie is minor to Sonic. Sie is better valued on its own as the company makes itself known to the market. The only other company which I understand in this industry is Arrow pharmaceutical which was listed in Oct at $2.75 and has hit over $4 since then. I believe there is a market for generic medication and it is lowere risk than pure biotech.
Sie has 5 or 6 products in its portfolio. A number of them are ready to go, some are in marketing phase and some are in the sales phase. And obviously others are in the approval phase. Sie needs approval from each country that it intends to sell the generic medication. So from these few products virtually sie can look at each country potential and get into the market (obviously subject to any restrictions from the licence). Sie will seek new licences and then again new markets will be open to them.
At this stage Sie is tackling the Asian market and I think this is great. Being poorer nations the Asian population will embrace new and cheaper medications. Firstly there will some that will not be able to afford the medication can now access them. And for those who are just able to afford there will be a choice. Sie range of medication covers common illness which is another reason why I like them and their potential.
In terms of employees I had a look at the profiles of senior management and it looks good with a good mix of professional finance, marketing and scientific background. Sie has assocaited themselves withprime organisations in Singapore and that will be to their advantage in connecting with Asia.
In summary, sie has great potential which at the moment has yet to be recognised. I think simply because it is only 3 weeks old and people have not been aware at this stage. It is in a potential industry with billions of dollars available for pick. It has support of Sonic and a great and skilled management team. Here I have just given a summary, there is so much more to discuss on sie but time will tell. Next year will be a challeging one for them as they try to operate as a single entity and ready to roll their products out. On these basis I think green alert to at least 10cents is fairly conservative. Once the selling has died down and settled, sie could be in the range of 15cents which I felt is where it should be in the first place.
Research yourself and see if you agree.
Bigprofit
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