 Super,
I'm sure you must have picked up on it by now, but I've 99% convinced myself that OXB's effective closed period since our major shareholder bid for Catalent (who have a business division which fits nicely with OXB's business) isn't a coincidence.
It of course could turn out to be just that, but I don't think it is. I've thought about this for a long time now and tried to work out what else it might be (malaria and such) but I think that by far the best fit (on information we have) is Novo and I'm expecting something to happen following the EU/FTC decisions on the Catalent bid (the EU decision due by tomorrow night).
Novo seem to want to diversify away from the diabetes business which has made them their billions and CDMO ("selling expertise to others") seems eminently sensible to me. They have to do it on a huge scale else it's pointless for them (what use is a £40m profit to a company with £150bn in assets?).
If they want the world's biggest or equal biggest CDMO then buying the previously struggling Catalent for $16.5bn is a good start.
Assuming the regulators say yes then my best guess is that Novo will make a very friendly offer to OXB which Frank will recommend to us. That will go very quickly as Novo have no need to visit banks or the markets and after we all accept then Frank will be asked to roll out OXB into the 4 Catalent C> sites + the empty VMIC site at Oxford.
From then on OXB Catalent "a Novo Holdings company" will not only have all the "firsts" but will also be the biggest in C> CDMO. Frank will be back in charge of a private company and with the support Novo will offer I expect them to do very well.
As I've said a lot, just the way I see it at the moment, but it all seems to fit very nicely and if we are all still OXB shareholders this time next year then I won't be disappointed but I will be surprised. |
The 'spending spree' continues. Where will it all end?
Novo Nordisk keeps manufacturing expansion spree rolling with plans for $400M quality hub in Denmark
Amid a multi-year, multibillion-dollar spending spree to scale its global manufacturing capacity, Novo Nordisk is laying down fresh foundations at its old stomping grounds in Denmark to bolster a critical component of production: quality control.
Novo will invest 2.9 billion Danish kroner (roughly $409 million) to construct a new, 53,000-square-meter (570,487-square-foot) quality control laboratory in Hillerød, Denmark, where the company also operates a sprawling plant focused on cranking out injection pens for chronic diseases such as diabetes and obesity.
Novo said Monday that it’s already kicked off construction on the lab and plans to complete the project in 2027. The $409 million outlay represents the company’s largest investment in advanced quality control to date, the company noted in a release.
Once completed, the new facility will act as a central hub for quality control operations in Denmark and consolidate existing locations at a single site, Novo explained. The quality assurance hub is being designed to meet both “known demand” as well as future capacity expansions.
“As we expand our manufacturing capacity and anticipate new products to meet the growing global demand, this new quality control facility will play an important role in ensuring the quality of our products and position us to meet the evolving requirements of patients and regulators,” Erik Lorin Rasmussen, Novo’s SVP of product supply for aseptic manufacturing, said in a statement.
Novo’s investment follows a string of high-profile cash infusions designed to bolster manufacturing capacity in recent years. Chiefly, Novo has busied itself beefing up in areas like fill-and-finish to meet the rampant demand for its diabetes and obesity GLP-1 agonists, Ozempic and Wegovy.
At Hillerød specifically, Novo last June unveiled a 15.9 billion kroner ($2.3 billion) investment to install a new, 700,000-square-foot multi-product facility, which is slated to start producing active pharmaceutical ingredients by 2029. At the time, Novo said it had embarked on the project to “develop its future clinical late-phase product portfolio.”
More recently, the Danish drugmaker in June said it would lay out $4.1 billion to construct a second fill-finish plant at its campus in Clayton, North Carolina. The facility will chip in on production Ozempic and Wegovy and represents a portion of Novo’s total planned manufacturing investment of $6.8 billion in 2024.
Meanwhile, just this week, vaccine maker Novavax said it is selling a recombinant protein plant in the Czech Republic to Novo Nordisk for $200 million. Novo and Novavax expect that transaction to wrap up by the year's end, at which point Novo will take control of the plant and some 300 employees who currently work there. The facility will not be used to make Ozempic and Wegovy, a spokesperson told Fierce Pharma Wednesday.
Elsewhere, Novo is in line to purchase three Catalent fill-finish sites for $11 billion from its sister company Novo Holdings. Novo Holdings, which operates alongside Novo Nordisk under the banner of the Novo Nordisk Foundation, is aiming to purchase CDMO Catalent for $16.5 billion in a deal that’s expected to close in the next few weeks. |
I simply go off the sector average for CDMO market caps being a little over 5x sales, with the top end of the range being those in profit and those in the higher tech like Samsung (i.e. not generic pill bashers).
OXB have indicated that sales next year will be somewhere around £180m.
If the market valued us as highly as Samsung Bio (15.77x sales) we would be almost exactly £27 per share.
That's not to say I expect that, but it's something to bear in mind when dismissing £10 as fantasy.
At the moment I'm more inclined to wonder what the premium is that Novo would be prepared to offer, in the full knowledge that as OXB moves into profit then the longer they delay the more it is going to cost. |
I would suggest that a twelve month target of 550p is realistic,a target of somewhere between £6-£7-50 perhaps optimistic and something approaching ten pounds is fanciful.However,remember that some of the high range price targets haven’t been plucked out of thin air,they’re generally predicated on tried and tested analytical ratios.On a price to sales ratio ,OXB is undervalued compared to many of its peers.My target, for what it’s worth, before I would top slice any stock would be 750p but I tend to agree with Harry that ultimately like most good UK companies,OXB is more than likely to be acquired. |
It's very difficult to second guess these things on information available to us Gareth, but I do know that OXB spend quite a bit of time & effort on their sales pitch to much larger investors than us. Could easily be someone from the Jefferies conference who liked what they heard and have been buying a few since. Could easily be many other things too.
Separately, I become more convinced by the day that Novo have made a top level decision to use some of their enormous cash pile to build a manufacturing empire which will rival Lonza, Samsung and such.
If you think about it then currently Novo have a huge number of eggs in diabetes and weight loss (which are very closely related). If they want to do something strategic by way of future insurance (i.e. mitigate against being a Kodak with their eggs in the camera film basket) then building an empire of being a very technical service provider to others is quite a good idea.
You know my thoughts on how they can get a running start to be the leading C> CDMO. |
A lot of trades at 425p including 215K “sel”. Volume does appear to have picked up this week with a couple of new broker notes (neutral not particularly informative from JPM). Could something be stirring? Interesting to see what happens when NYSE opens. May be nothing! Time reveals all! |
It's an interesting prediction there Jez.
Unless you are expecting some kind of as yet unforeseen disaster here, I'm not sure why you would think that a record revenue year by something around £40m over this year plus a profit would only be worth another quid.
That said, how many times did we have to suffer Peter the badger and his handbag carrier luminaire tell us that OXB were going bust? And get voted up for it... |
You will upset HST with your projection. However I would say that is a much more realistic twelve month target. Peoples expectations round here have been totally unrealistically raised. |
Well, looking at the volume today, i guess London is celebrating Christmas early.
My prediction for 1 year from today is £ 5.50.
If it comes to pass, i would be more than happy. |
Who puts a fairy at the top of their Christmas tree? |
2 days to the deadline for the EU anti-trust decision on Novo Catalent.
Meanwhile Novo on a charm offensive with Catalent's existing US customers, offering them contract extensions by way of reassurance.
The US FTC decision is supposed to be before the end of the year.
Catalent seem very happy to be taken over and have their recent wobbles rendered irrelevant by Novo's very deep pockets.
Catalent's shareholders 99% in favour rather than the other option of Catalent staying single.
Novo is reassuring Catalent's customers.
US stock market seems to think that the deal will go through at the offered price, which to me is a reminder of the bookies all knowing Trump would win whilst the world's press were busy thinking up reasons of why he wouldn't.
Personally (usual wealth warnings here / amateur forecasting alert) I think the deal will pass both regulators without issue.
Shortly after that Novo Holdings will sell 3 factories to Novo Nordisk and become owner managers of the rest (a very large global CDMO which needs a boost).
If that happens then we soon (relative term) will find out if there is a connection between Novo Holdings owning 12% of OXB and not a single OXB insider buying shares since Novo Holdings bid for Catalent.
As mentioned previously many times, there's perhaps a healthy dose here of me connecting random events which look connected but are just circumstantial.
However, it does make sense to me that if Novo Holdings are looking to make Catalent a core asset (and they are) then they can't just leave it as is. There must be a plan (which is always easier to come up with when sat on a cash mountain).
The Novo Holdings non-exec director on our board will know much better than us what OXB can do. But he will also know that for OXB to grow (even at better than 35%) will take years because that's how long it takes to fund and kit out new facilities.
Money isn't an issue for NH (unless having too much of it is a problem) but in weeks they are likely to own 4 cell & gene therapy factories and a blank canvas of the brand new and empty former UK government Vaccine Manufacturing & Innovation Centre (VMIC) in Oxford, on OXB's doorstep.
I couldn't give you the odds here of this coming true, but if following Catalent approval Novo Holdings bid for the 88% of OXB which they don't own, then something which would have taken OXB 20 years or longer, can be done very quickly.
Novo could roll out OXB's tech / knowhow and experience into the existing 4 Catalent C> factories, whilst OXB get a 6th site at Oxford to expand into.
OXB shareholders get paid off on acceptable terms which Frank will recommend. In exchange for that money Novo Holdings quickly own the biggest / best C> CDMO.
Stranger things have happened at Christmas. |
The number of London-listed companies leaving the stock exchange due to takeovers is at the highest point in over a decade.
A total of 45 companies have de-listed so far this year, the highest since 2010, according to figures from Bloomberg.
Major deals include the sale of video game company Keywords Studios to private equity firm EQT, cybersecurity business Darktrace to Thoma Bravo, and Virgin Money, sold to Nationwide.
A further string of sales are expected to be completed in the coming months, such as the Czech billionaire Daniel Kretinsky’s takeover of Royal Mail owner IDS and Carlsberg’s purchase of Britvic.
It comes amid concerns that the London Stock Exchange is no longer attractive to major companies. Revolut’s chief executive Nikolay Storonsky said earlier this week that listing in London is “not rational”.
He told the 20VC podcast: “If you look at trading in the UK, you always pay a stamp duty tax, which is 0.5pc. I just don’t understand how the product which is being provided by the UK can compete with the product provided by the US.
Daily Telegraph 4th Dec |
After all the efforts expended yesterday in another memorable "fakeout" on the chart, troops are retiring to regather their strength for another assault (after Christmas?)...so barely a trade out there atm :) |
"News, news, news" would probably be more useful though Dom. |
Remember The Donald says "fight, fight, fight!". |
Defence at £4.30 battling heroically to hold the line firm - no Dad's army here but the real troops :) |
The way I had it explained to me is that JPM are an OXB broker purely so we get invited to "the" biggest investor healthcare conference of the year. Pay JPM to be your broker and you get an invite, but a small cap bio is not really a stock that JPM would cover in depth, so you get what you get which is basically this.
Novo boomed massively on being the first to market with the GLP-1 weight loss drug in that biggest market. I think their up and down since is to do with people trying to work out what the real price is rather than anything post-covid related. |
P75/DC, keep the small punters out....make it all look so dull and boring and when we are at deemed "suitable" price flex to uber bullish in the broker reports, we all buy in when they sell out....is that not how it goes small punters buy high and sell low? |
Nice jump. Big trade? |
Lack of the means to do their diligent research? |
I just don’t get why the brokers are being so pessimistic for share price targets. |
If so GJ, perhaps move on and find a different broker.... |
Is that an update from today. If so and if JPMC (joint corporate broker) then a "neutral" recommendation is a poor update. |
Harry, the Novo share price has been some surprise recently to fall from 1.40 to 1.00 and now back up a little. You have to say at some point this is all look very over sold and due a recovery bounce across the sector. I see the EWI trust is moving ahead quite a bit now which supports the view that parts of the small cap bio is drawing some interest too. Traders are happy to take quite a decent number of shares for only a small discount to the bid, so there are buyers here atm even though the market looks so thin.... |
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