Nvidia - a share to follow? |
Almost all my shares down today ygor, including one blue chip.
Straying into politics here but perhaps the fact that the "fully costed" manifesto promised budget (approved by the city / believed by some of the electorate) and the actual "painful" budget promised now in government, is going to cause a bit of instability until we actually find out how painful it is going to be? |
Lots of buying today but the share price is falling. Interesting. |
If you want my shot in the dark taffy, then bearing in mind that was out on the 19th (see post 8512) I'd guess it's an attempt to round up a few more attendees from quite a small potential audience of people who can actually understand it all.
It may of course just be a "speed of OXB" thing too (remembering that ArcticZymes told us that Frank was their new chairman long before OXB bothered). |
Oxford Biomedica to host a free webinar showcasing its AAV expertise |
Thing is Harry, as far as Covid is concerned, you have the gift of 20:20 hindsight, unlike the medics who had to deal with it at the time. I hope, in 3 years time, you can come back here in your DeLorean and tell us what to do about MonkeyPox. |
I'd agree wholeheartedly that the whole of covid was madness, but I'm not really comparing to that period.
If you look at our bioprocessing for Novartis, then I think you could reasonably take a guess at 15% of our total revenue last year.
Yes it's a rough guess (and on the low side I think) but 15% of revenue from a support contract for just one approved drug.
Back in April at the results they told us that is now doubled (with the CAR-T news from March) so now supporting two approved drugs, but the breakdown in April was:-
Pre-clinical through to early-stage clinical 46
Late stage clinical 3
Commercial agreements 2
That was true in April, but of course they have won more work since, and remembering that just supporting a single approved drug seems to be worth something like £14m per year to us, then somewhere down the road there's an awful lot of money here with the drugs which eventually get approved isn't there? Which is why I suspect Novo would rather like to own the whole show by then. |
The market is fickle and there are clear inconsistencies in the rating applied here compared to previous valuations even ignoring the faddish sentiment that surrounded OXB during the Covid period.Hopefully,something might surprise but all things being equal,simply applying normal industry ratios suggests the stock has significant upside.I feel very comfortable holding and waiting. |
 The only countering point I would have to that is to remind you of history with OXB and what happened when a gene delivery company which almost nobody outside the industry had heard of got signed up with Novartis to support their CAR-T drug. If you look at the chart for OXB (those peaks in 2015 and 2018) then you can match it up to the Novartis deal progressing.
Remember also that back then OXB is a significantly smaller company with much less in Oxford and of course nothing in France or the USA.
So all that happened on the back of supporting just one CAR-T contract which eventually succeeded and we know there is another commercial CAR-T support contract about to start with a different company. They told us in March, they just haven't told the market what it is yet.
My favourite theory of the moment (I'm sure you've noted) is that something similar happens soon, but this time the people who picked up on the Novartis news last time (whether in the investment community or the industry press), look a little deeper and notice what OXB has built up in the background whilst simultaneously keeping quiet about it.
I think this is where Frank needs to earn his money at the interims and my suspicion is (and this was certainly the case at the interims last year) that he has been saving up news to release as one big hit for maximum impact and coverage.
But we will see. |
Once OXB demonstrates that its CDMO model will prove a reliable profit generator,a rerating will follow.Yet,since OXB is below most fund managers radar and brokers livelihood revolves in dealing in large caps,i don’t expect a damascene experience to propel the stock into the FT250 this year.Next year,i think its probable.The opportunity,but also the frustration,lies in the fact that the market has never found it worthwhile to unearth small company opportunities.That’s why i think that a lot of smaller companies would arguably be better off being private rather than listed,suffering relatively heavy regulation but lightweight research coverage. |
ygor,
I'm sure that yours is the wiser approach, but I'm also sure that there isn't one correct approach - else we would all do it and then there would be no money to be made.
I know that I must have confirmation bias, as it would be pretty much impossible for me not to have it, but I think that as long as I know that I have it and don't try to kid myself that I haven't, then that's half the battle.
There's a similar theme here with my observations (for want of a better word), based upon many years of watching OXB - like malaria (which OXB have never mentioned), why none of the senior staff bought in the last open period (when normally they are supportive), why they seem to be keeping (and recruiting for) Yarnton (which was supposed to be a temporary site to be vacated this year), and many others you may remember - but I'm happy for anyone to take a pick and mix approach with anything on that list.
When OXB was 100% drug discovery, before becoming part drug discovery / part contract gene delivery for others, then being lossmaking didn't really bother me too much because there was always the chance of a mega-pharma hovering with a near billion dollar deal for a product.
With the 100% CDMO company, which I've written many times the 20 year older me prefers the lower risk profile of, then I think it's much more important to make a profit and OXB have guided that for '25 - reiterating it very recently.
For anybody in the market who has no time / interest in my anorak level OXB spotting (I'd guess most of them), there is still some extremely obvious stuff which I expect to be headlined at the interims on the 23rd.
They do seem to be busy (in a constant state of recruitment now) and I've mentioned it seems obvious now that they are extending the lease on Yarnton.
Remember a quick job for us is still the best part of a year and we invoice on delivery, so the £80m which Seb's team sold in the first 7 months of last year is likely all to be invoiced in 2025 at the earliest (on top of what we already had in the sausage machine and what the sales team will sell in the rest of this year).
I'm sure this year will be something around what they have already guided, simply because of the time lag explained re what they can invoice and the fact that they are plainly spending money on increasing capacity. But next year?
They have already said profitmaking, but on what revenue? The way things are going that could soon start to look a lot better than +35% of this year.
If it does end up looking something like £200m (which is far from impossible) then OXB would currently be trading on less than 2x those forward sales. A quick look on Google tells me Avid Biosciences are on 7.6x whilst Lonza are almost bang on the sector average with 5.4x and at the other end of the scale Samsung Biologics is on 16.85x.
I go on a lot (I know) about the many potential wildcards (like what Serum want the bioreactors reserved for) which are genuine game changers in waiting, but much more likely in the remainder of this year now is what happens to this sleepy second line stock when the market wakes up to the fact that next year is profitmaking?
But I've done variations on all of this many times before. It's simply the wait for the interims now, which are quite obviously going to have a bigger than planned spend this year (more staff, etc.) against the first guidance for 2025 which looks at the moment like it's going to be everything we could hope and a little bit more. |
Interesting Harry but remember that you don't always have to be invested in a share to retain an interest in it. My portfolio consists of shares that I know and trust but it doesn't stop me selling them down to a level where the investment represents the profit that I have made on it. That keeps me interested and I can then buy more if I like the look of it from time to time.I bought some more this morning and will insert a stop loss at 280p on the advice of My AI friend! |
That's an interesting post Ygor and I agree with most of what you write, but I also think it's never 100% black and white.
With the second line stock then I agree with you, but I wonder how much is down to not being able to buy (fund rules and such) rather than OXB being completely under the radar in smallcap? I obviously think it's a mixture of both, but Novartis bought shares when we tied up for CAR-T, Serum bought after covid, Novo bought before and IM basically gave us a company at cost and then threw some money in to get their shares. That's a lot of due diligence and I would imagine that type of thing does get noticed as a confidence / reassurance factor.
I agree more when it comes to the covering analysts, as although 8 seems a decent number (we have had more) I don't think some of these do much more than look at the summary figures twice per year, but I expect them to become more interested (and a few more either initiate / restart coverage) when we go back into the FTSE250.
Me sitting through the bad times is just me. I'm not a natural trader and I think I would make a disastrous day trader as I take far too long with my decisions. Reassuring me slightly of my investing style choice is the fact that a lot of household name investors are also in the "buy once you have decided and then hold for a very long time" camp.
A point to bear in mind here, which might help work out the mindset I come from, is that for me and a few of the other old names on here, this isn't the first OXB crash we have sat through.
Roughly 15 years ago OXB had a golden deal with Sanofi for a cancer drug named TroVax and it unexpectedly failed a registration trial it was expected to meet, which then hit the share price very hard. That was a much worse scenario for a (then) much smaller company with few other irons in the fire.
Having been through that then the post covid crash was very much like the Monty Python knight who'd had worse.
There's a Peter Lynch interview where he talks about going through a crash himself and being seriously underwater, noting that his only option was to wait it out. But his point then (still valid today imho) was that if your reasons for buying / holding prior to the crash are unchanged after the crash, then they are unchanged. This of course is a completely different mindset to buying something at 25p because the trend indicates 35p then cutting losses at 22p and all without ever taking too much notice of what the company actually does.
I'm not going to try to argue that I wouldn't be significantly better off if I had used some kind of trailing stop loss, because I plainly would be, but unfortunately for me, once I have decided to buy something (which often takes a long time) then I am buy and hold. Obviously there is a lesson learnt here, but I also hope not to go through any more pandemics.
We have lost lots of OXB fellow travellers along this long journey and I've always wished them well, with my usual platitude something along the lines that the right time to sell for them is the right time to sell. What's before or after doesn't matter.
Even today I have no particular price in my head at which I would be a seller, but (as you know) I do feel that there's a very good chance that Novo will save me the trouble of having to make that decision.
It dawned on me earlier today whilst I was pondering the August bank holiday weather, that with today being the 25th we are of course only 4 months to Christmas and the end of the OXB FY. That will be on us a lot quicker than than we think (time certainly flies for me these days) and then we are in to our first profitmaking year since the '21 pandemic year.
If they can do better than £23m EBITDA on c£180m (a 13% margin?) then it will be our best ever year for both revenue and earnings.
Remembering that everything in the stock market sells on the future, then somewhere between now and then the market has to come to its senses.
I still think there is a trigger for all of this, with one possibility being the word malaria - but there are a lot of possibilities / contenders for that trigger and I will be surprised if Frank hasn't got a rabbit in the hat for 4 weeks tomorrow. |
Harry - the problem with a share like OXB is that firstly it's a second line stock and secondly it's a second line stock. In my experience, the market has never taken prisoners when it comes to slashing the price of second liners that disappoint. That makes me very nervous about dealing with them on an individual stock basis because you really do have to be right on top of what is going on 24/7. I don't usually fish in this particular pond but it's a conjunction of the planets that has brought me here of which you are a part. I've never been on a thread where the basics of a company are so well monitored which is in no small measure down to you. That said, you freely admit that you've sat through the bad times here which demonstrates that you can still get burnt with good monitoring from the outside. My gut keeps telling me that there is something potentially big to go for here so I am in the mood to put few more chips on the table - with a stop loss position to protect against unforeseen shocks! PS. Companies usually get taken over on the very rare occasion that I feel like this! |
I liked the guy very much Ygor, but his weakness was smoking, which he did to excess and it caught up with him way too young. If you think back to the familiar public faces we all knew who were killed early by their vices, it would be quite a list.
Isn't it 19 working days to the interim results now - and in a similar fashion to last year not an awful lot of specific news in the runup period since the FY results?
I'm expecting a repeat performance where for some reason (never convincingly explained as yet) they prefer to wait and carpet-bomb news on the day of the interims.
Using my rule of thumb here, that if something changes materially from guidance that they have to tell you (they haven't) and noting that they have actually restated the better than 35% growth guidance, then it should be a good presentation.
It's a bit counterintuitive I accept, but nobody really cares too much about what has happened - it's more what is going to happen (as per when we were battered following best ever results for FY'21 because the covid work was coming to an end). Unless something has gone horribly wrong (see previous paragraph for why it hasn't) next year will be the company's best ever revenue year without a penny from covid vaccine manufacture. Profitable too - and again on our normal operations (no pandemic exceptional work). Happy days.
Last time OXB was promoted to the FTSE250 was 2020. Back then the mood was a little different and I was in the habit of running sweeps of what the share price would be on certain dates. With the caution that this was a lot more akin to pinning the tail on a donkey for thread morale rather than any actual analysis, I thought £10 was a good round number for the Christmas sweep that year. One of my reasons for guessing what seemed improbably high with the share price only a fiver earlier in the year was the FTSE250 "effect". I won it with bang on £10 (a fluke of that and other circumstances I know) but it wouldn't surprise me in the slightest if we managed a similar trick again this year - with a reaction to FTSE250 readmission + some exceptional news. |
Harry - so glad that my handle cheers you up! I play golf so your mention of Marty Feldman immediately turns my mind to his unforgettable sketch where he just can't get the golf ball into the hole. It's never far from my mind as I approach a green! As to your very good update, I'd say it's bang in line with the ChatGPT view - but with much more justification and detail. Things are getting to the stage where I might buy a few more shares on a dull day! |
With the financial health warning here that I am a card carrying optimist, I actually think you will end up with more than that RBC target.
I'm far from an expert / insider on the workings of the market, but even I know that good news for a small cap stock goes unnoticed by most of the main market players. Some might be aware (especially if they held previously) but still can't buy because we are not FT250 at the moment.
Second part of the OXB double whammy is that most of the people who bought in during 2020/21 did so because it was a covid stock they had seen in the news and not because of anything about gene delivery, which we of course know is OXB's crown jewel (first in man lentiviral vector, first commercially approved lentiviral vector).
I think that last paragraph there is a lesson in what a single word which the general public recognises can be worth. A word like malaria maybe?
The new commercial CAR-T deal in March (still no details) is the biggest thing for us in ages and they seemed to imply in the results presentation of the following month that they haven't yet included it in the guidance. On top of that there are now of course a line of late stage deals (so in pivotal BLA or registration trials) and we know, because it's a point Stuart has made often, that commercial supply is where the big money is.
I'm very pleased with the amount of work Seb's team is bringing in at the very earliest upstream process development stage, but I don't think we will be shareholders by the time the successes from those drugs reach the end of their trial journey.
Back to me as an amateur market watcher and I'm struggling to remember a stock which rerated slowly before settling gently on fair value. I'm sure you understand this much better than me, but the momentum traders and the algo machines seem to chase anything well past fair value once noticed - much like OXB was chased down when they worked out that a couple of institutions had to sell. So really it's often more wild swings of expectation / speculation rather than anything particularly specific about the company itself.
If I'm anything like close in my guess that they are having to spend some of our cash pile now to recruit for a volume of work they didn't expect to have this soon (big hints in the last RNS) then when that work pays off from next year onwards, the returns on our cash spent will be very good.
My tealeaf / pine cone forecasting senses all tell me that the interims (which we know are basically the full year guidance with 85% locked in) will be very good for '24 but brilliant for '25.
Appreciate that I mostly preach to the converted here, and so we all know that next year is already guided for OXB's record best ever revenues, but even the lowest guiding analyst of the 8 forecasting next year (probably numis) is still guiding better than our record covid year - of course without the AZ vaccine revenues which were 87% of our bioprocessing revenues that year and drove us to £15.
It just makes no sense, but then many much smarter people than me have noted that the market proves itself to be irrational over and over again.
I can see some rough sequence of events here where the amount of won work, the late stage work turning commercial and some wildcard (maybe malaria vaccine production) has us crashing back into the FT250 and then possibly way past this CDMO sector average multiple as a lot more people who suddenly can buy OXB again take a look at the corporate presentation.
Somewhere on that path I think Novo make a very friendly offer for the much bigger company in 3 territories now (remember £15 was just Oxford at the time) and that's that. |
I think we will gradually rerate over the next couple of years.
I bought into the RBC £17 target. |
Good morning Harry. I haven't been looking in here much lately because you said that you were going to take a sabbatical. Didn't seem to last very long! Being mathematically trained, I've been slightly struggling with all of the about vectors on this thread. It was explained to me by ChatGPT that a mosquito is considered a vector in biology because it is the delivery system of the pathogen malaria. So now I get it. While I was chatting I asked ChatGPT to assess the probability of a bid coming in for OB at some point. Rather surprisingly it came up with 50 to 70%. Thought that might cheer you up. |
Many thanks Plutonian. |
Also maybe TRiP ?
The TRiP SystemTM works by transfecting a plasmid encoding the bacterial tryptophan RNA binding attenuation protein (TRAP) in production cells. A TRAP binding sequence (tbs) is inserted upstream of the transgene in the vector genome. In production cells, in excess of L-tryptophan, the TRAP protein binds to the tbs sequence and blocks translation of the transgene mRNA.
As previously cautioned, I know roughly what OXB does. How they actually do it is a different matter altogether. |
Josef,
You're honestly over my head with this one. For difficult technical questions I usually shine a giant P into the night sky and it awakens Plutonian from the bat cave.
I do know that some of OXB's special tech is labelled U1 and U2.
U1 is RNA related - see this release as an example
U2 is not RNA related but did have some popular hits before their lead singer went a bit strange. |
Yo, Harry!
A quick little update from the north. This piece of information was pulished the other day:
hxxps://www.sumobrain.com/patents/wipo/Compositions-comprising-sequence-specific-endoribonuclease/WO2024165645A1.html
As you can see it concerns an endoribonuclease. It has been expected for a while, and I have been looking forward to it.
Naturally this folds into the RNA space. Previously a T7 RNA polymerase which is a more common enzyme in the RNA space. This one is said to be totally unique and hopefully a door opener.
Does OXB do anything in this space or is it the wrong answer to our question ?
Greetings from Norway |
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