Alliance Pharma Share Discussion Threads

[yorgi] 06/6/2013 08:16

Cisk

On or off the radar as long as the BOD continue to add to our portfolio that's fine by me :-)

I would have thought the price paid is fair and I'm quite sure the BOD know better than I do. It's good to see that they are continuing to build the business and that's what counts.

[cisk] 06/6/2013 07:26

yorgi - I'm happy for APH to remain off the radar - this BB is refreshing free of people ramping etc.

Very interesting acquisition announced this morning - for me the key point is that APH has acquired the worldwide rights to this product; it's the first time from memory that they have done this on such a scale.

John Dawson did say there were opportunities to repeat the Alliance business model in Europe - and now it seems, worldwide.

The price also seems fair - 3.6x sales: Alliance should have a net margin of just over $2m p.a., giving around a five year payback. Hopefully they will be able to lift sales also.

Interestingly a couple of colleagues with babies were discussing Ashton & Parsons yesterday, and how hard it is to buy it (£15 on ebay etc). I think once the new production line is up and running, we should see a healthy contribution within the current financial year.

GLA

Cisk

---------------
Acquisition

Alliance Pharma plc (AIM: APH), the speciality pharmaceutical company, announces that its wholly owned subsidiary Alliance Pharmaceuticals Limited has acquired all existing rights to Syntometrine(TM) from Novartis AG and Novartis Pharma AG (together "Novartis") for a consideration of US$11.5 million.

Alliance already owns the UK rights to Syntometrine, an obstetric drug used in the final stage of labour.

Novartis and its affiliates ("the Novartis Group") have been selling Syntometrine in a number of countries worldwide including Australia, South Africa, Malaysia and New Zealand. In the 12 months to March 2013 the total sales of Syntometrine by the Novartis Group were US$3.2 million and the gross margin generated was US$2.8 million. Alliance expects to have annual distribution and operating costs of approximately GBP0.5 million associated with these new territories.

The US$11.5 million consideration is being funded from existing cash and bank facilities, including a GBP3.5 million drawdown from the Group's GBP30 million acquisition facilities. This leaves GBP10.0 million of the facilities available to fund further acquisitions.

In addition to the Syntometrine rights, Alliance will be acquiring inventory which is expected to have a value of approximately US$0.3 million.

Commenting on the acquisition, John Dawson, Alliance Pharma's Chief Executive, said: "We are delighted to acquire these significant overseas rights to Syntometrine, a product we already know well through selling it in the UK for many years. Although there will be some costs of operating the new distributorships, the acquisition will be immediately earnings enhancing and it fits well with our strategy of increasing Alliance's international sales."

[yorgi] 03/6/2013 09:41

I am surprised by the apparent lack of interest in Alliance Pharma. They have a good business plan with a strong history of growth and pay a dividend into the bargain.

[phoenix1234] 24/5/2013 17:24

AGM trading update, still the right prescription? http://www.shareprophets.com/analysis/464/alliance-pharma-agm-trading-update-still-the-right-prescription

[gj2] 17/5/2013 15:22

Cisk :
Thanks from me also - very succinct summary. Bought into these earlier this week and will continue adding in the future with confidence

[cisk] 17/5/2013 14:46

no problem yorgi - I think it's a great company - will look to add on any weakness...

[yorgi] 17/5/2013 14:34

Cisk, thank you for that summary very much appreciated add to my confidence in this companies business/strategy I'm pleased I decided to buy in.

[cisk] 17/5/2013 14:24

I went to Proactive Investors last night and saw Alliance / John Dawson present - here's a summary:

John is one of the few presenters I've seen who finished exactly on time: He presented an overview of the company, including a very useful slide showing the age of some of the products in the portfolio – the average age being 34 years!

He also showed a sales graph of the products, averaging circa 3% pa, and then walked through some P&L graphs etc, both historic and for last financial year.

One chart clearly showed the impact of Deltacortril and the massively +ve impact it had on the bottom line. Removing this one-off event, the profit trend was very clear, with a gradual rise since halting work on the sleep drug the company was developing back in the mid-2000s.

John then discussed prospects in some detail for some of the larger contributors, specifically:
Ashton & Parsons – baby food – this is very much in demand, and sells on ebay for far higher than the retail price (I checked this and it is indeed true). This product was manufactured using very old machinery (40 years rings a bell) so it kept breaking down. New machines are being commissioned to come on stream later this year (I'm not sure at whose cost – I'll follow up with John on this). Once in place, production will resume, and given the pent-up demand there is no reason to assume that the product won't contribute significantly later in the year.

Acne treatment – again this is a product that is being promoted (John mentioned youtube videos by youths praising the product – I've yet to check it out...)

Immucyst – product produced by Sanofi until the plant had issues – this will contribute in FY14 when it comes back on stream, and should be very +ve next year.

Acquisitions this year – John showed a slide with acquisitions per year; none so far this FY but given the past record and the firepower available I would be surprised if there weren't any.

Cashflow – it was very clear that APH is very cashflow positive – a useful table showed that basically acquisitions are funded from cashflow (save a small increase in debt last year of around £2m) and that dividends are a small proportion of available cashflow.

Dividends – APH will continue to pursue a 'progressive' dividend policy, but without committing to % each year (cover I think is currently 4.4 times so plenty of headroom there). I asked John about this afterwards, and he was clear that dividends will be paid out of available cash and that acquiring new products are the priority – something I agree completely with.

Questions at the end:
*Amortisation – an ex-accountant asked why APH don't amortise the value of the products they acquire. John mentioned this has been discussed many times – the accountants are happy with the current treatment. Also given the age of the products – over what period should they be amortised over? It looks like a product pays for itself after around 4 years (given a bedding in period of around a year after buying it). So clearly if you amortise over 20 years etc there would be a relatively minor P&L hit.
*Debtors – someone asked why debtors had gone up (I think by between £1-2m) when turnover was broadly the same. John didn't know the answer to this (one for the FD) but it's a relatively small amount in the sales context.
*Competition for new deals – interesting question about this – when APH bid for a product, is there much competition? John said there is usually at least one other bidder, sometimes they go to auction. He also commented that APH are seeing more opportunities – as big pharma are more keen than ever to shed smaller, niche products.

Overall impressions – It's the 2nd time I've met John in the past month, and he came across very well – very knowledgeable about the company, optimistic about future prospects etc, explained everything very clearly and concisely.

He very clearly talked through the company's model – very much a virtual organization in terms of manpower and production, with a small core staff dedicated to finding new deals, establishing a sales presence in Europe etc. I asked John previously about expanding into manufacturing – he was less keen on this as clearly it's something that is not their core competence – and given the diverse range of products in the portfolio, also makes sense.

APH came across as a having a very stable core of products, with a good margin and gradual sales growth. When promoted, sales growth was shown to be in the order of 100% in some cases. Also new opportunities can produce one-off spectacular sales, such as Deltacortril provided, until generic competition enters the space.

John made the point about how they get their deals – quite often big pharma will divest a small, non-core product because it's exactly that – and they need the manufacturing capacity for other products. So this presents opportunities for APH.

Finally it's worth remembering the large shareholding owned by John and his family – so often companies present at these forums where the board have little or no 'skin in the game' – instead they have loads of options, bonuses, contracts with their own service companies etc. The CEO's fortunes are aligned with the company, so there is every reason to believe his are a 'safe pair of hands'.

Regards

Cisk

[yorgi] 17/5/2013 11:26

Looks like last nights presentation has brought a few more buyers in :-)

[ceohunter] 17/5/2013 10:57

To view Alliance Pharma's presentation from last night's Proactive Investors One2One Investor Forum, click on the following link:

[huntie2] 14/5/2013 14:42

Yes, it does all seem like a decent story. Let's hope it all plays out....

[yorgi] 14/5/2013 12:53

Thank you Mazarin......pleased I bought in :-)

When I put it on watch with intention of buying in it was not on the expectation of it soaring away in a short time......don't mind if it does.....but I was thinking as a long term hold with dividend. Then with a new acquisition or two the share price could of course move sharply.

[mazarin] 14/5/2013 12:24

Huntie2 etal - Welcome aboard..!

[yorgi] 14/5/2013 12:19

I did like what I learnt at the Mi2013 show about their business, seemed a good business to me with plenty of opportunity to grow at a decent rate while also paying a dividend. Hopefully next year we will be able to add in our ISA.

[huntie2] 14/5/2013 12:01

good morning everybody! just bought some of these for the first time after watching and reading for a while......

[yorgi] 14/5/2013 11:01

I visited the Alliance Pharma stand at the Mi2013 show last month and thought their story sounded interesting and well worth considering. I have been watching ever since and was hoping they might drop back a bit more.......but today looked like they weren't going back any further so I have bought a few today.

EDIT

Wish it had been a few more :-)

[ceohunter] 14/5/2013 10:01

The directors of Alliance Pharma (AIM: APH), Motive Television Plc (AIM: MTV), Brightside Group (AIM: BRT) and e-Therapeutics plc (AIM: ETX) will be presenting:
Thursday the 16th May 2013,
Chesterfield Mayfair Hotel, 35 Charles Street, Mayfair, W1J 5EB

REGISTER HERE:

[protean] 14/5/2013 09:26

Tipped in Small Company Sharewatch at the weekend where they said "Cannacord forecast eps of 3.8p in the current year and 4p next year but if the deals keep rolling these look set to go much higher and the shares will fly. Buy."

[ceohunter] 10/5/2013 08:38

The directors of Alliance Pharma (AIM: APH), Motive Television Plc (AIM: MTV) and Brightside Group (AIM: BRT) will be presenting on Thursday the 16th May 2013.

Venue: Chesterfield Mayfair Hotel, 35 Charles Street, Mayfair, W1J 5EB (Charles Suite) The presentations will start at 6:00pm and finish at approx 8:00pm. After the presentations are complete the directors will also be available to take questions during a free canapé and wine reception

REGISTER HERE:

[mazarin] 09/5/2013 09:37

Big Thanks to mjames and Cisk, I really appreciate your feedback as a result of meetings with John DAWSON and Richard WRIGHT at recent Investor's presentations. I find both your comments very helpful and I hope other holders here agree. Cisk, you've certainly asked some very relevant questions and its good to hear that JD came across well. Pity about the 'compensation' issue, I believe the problem at Sanofi P originally occurred as a result of Flooding (natural disaster). Thanks again.

[cisk] 08/5/2013 09:15

Hi Mazarin, I did manage to catch up with John Dawson at this year's master investor and had a good chat with him.

I inquired about the Sanofi issue, staying on AIM, future deal flows etc.

In summary:
Sanofi: the issue was down to mold / damp (I think, from memory) getting into the manufacturing facility - which of course when something needs to be produced into a sterile environment, it's a disaster. So basically I think the facility needed to be refurbished and will come on stream later this year / early next. I wouldn't include any sales from this in current year figures.

I asked about possibility of getting compensation back from Sanofi - John didn't think there was much chance of this as clear negligence would have to be proved - very expensive & no guarantee of success.

AIM listing: John was comfortable with staying on AIM, especially with the hope that AIM stocks will be allowed into ISAs at some stage. Also the costings are much lower.

Upcoming deal flow: Obviously unable to say anything due to price sensitivity, John strongly hinted that deal flow is imminent - and that they are always considering deals on new products - indeed they meet several times a week to consider new acquisitions.

CULS: I bemoaned the fact that the drip feed of CULS into the market depresses the price each time - John said he was not considering using these again to fund a deal (and indeed the recent enlarged banking facilities support this). I think he said they expire in October / November.

Overall impression: Although I have had APH shares for many years (back when they were doing development on a sleep drug), it's the first time I've met John, and I have to say was extremely impressed with him, his approach, and how candid / straight talking he is.

I (jokingly) asked him several times to ensure that he had no plans for early retirement - he said he doesn't and also was at great pains to emphasize it's not a one-man band and he has built up a great team around him.

I appreciated his candor, and came away with the impression that APH is a sound company, with great prospects ahead.

Given that they increased their (well-covered) final divi by 10%, have agreed enhanced banking facilities, sales are going well (of course in a wide portfolio not every product will record double-digit sales increases - but that's the nature of the beast) gave me the confidence to add to my holding after meeting him.

He's at proactive next week and I'm going to try and attend.

Regards

Cisk

[ceohunter] 07/5/2013 09:21

The directors of Alliance Pharma (AIM: APH), Motive Television Plc (AIM: MTV) and Brightside Group (AIM: BRT) will be presenting on Thursday the 16th May 2013.

Venue: Chesterfield Mayfair Hotel, 35 Charles Street, Mayfair, W1J 5EB (Charles Suite) The presentations will start at 6:00pm and finish at approx 8:00pm. After the presentations are complete the directors will also be available to take questions during a free canapé and wine reception

REGISTER HERE:

[originalsilk] 02/5/2013 07:41

Got on board, hi guys, I do like this stock and the sector.

[mjames20] 22/4/2013 23:14

Hi Mazarin,

I spoke with Richard Wright and John Dawson at the master investor show last year. Both very straight forward guys who explained things clearly so they get full marks from me. The annual financial statements are also a model of clarity