Hunter Hall discusses BiotaJuly 6, 2009 12:51 am by Dean Morel...

Hunter Hall discusses Biota
July 6, 2009 12:51 am by Dean Morel
Portfolio Manager Steven Glass discusses Hunter Hall’s investment in Biota and the implication of swine flu.

A few key points from the video:

Releanza is one of two antivirals to treat HINI (swine flu)
If HINI mixes with seasonal flu which has resistance to Tamiflu then there is only one antiviral left, Biota’s Relenza.
LANI is main drug in pipeline. Finished PIII is Japan [results out soon]. One puff. [HRV is the other main drug in Biota's pipeline.]
Should have $85M cash as of June 30. [Biota had $55.4 cash at December]
Expect return of cash via buyback, dividend or capital return. [Biota management have been against dividends as with no franking credits they're a poor mechanism to pay cash to shareholders, especially shareholders in high tax brackets. I pushed for buyback at last years AGM with the price around $0.40 and they wouldn't do it then, though most companies prefer to buy their shares back at high prices so that could be an option. No, I'm not joking, most management teams are atrocious at share buy backs. Though as you'll read below Mr Glass predicts a much higher share price, so a buy back could be an acceptable option. In fairness Biota did buy shares back last year at a discount to the current price, 9.2M shares at $0.87]
Should make profit of over $30M or even over $50M a year going forward. [Biota's recent burn rate has been around $34M, so with $105M in royalties, they could make $70M before tax this calendar year.]
Currently a volatile share price dominated by day traders.
When institutions wake up to the story the share price will become more stable and Glass predicted a $1B market cap. Similar story for CSL and Cochlear. [The current market cap is around $230M, so that's a four bagger with a share price over $5.]
1.5 years of profit should equal current EV.
Last update from GSK was the 60M doses. Relenza sells for around $25AUD and Biota get 7% royalty for a payment of $105M. [Next update from GSK is their second quarter update on 22 July]
LANI should get large share of the consistent Japanese antiviral market.
The Big Picture



One tip for My Glass and others. You should never say “That’s a very good question” or similar statements, as what you’re really saying is, “your other questions are crap, but that’s a good one.”

I have positions in both Biota and Hunter Hall International Limited

http://www.fusioninvesting.com/2009/07/hunter-hall-discusses-biota/