Oxford Biomedica Share Discussion Threads

[dominiccummings] 02/7/2024 11:23

£2.96 .......... What don't we know?

[harry s truman] 01/7/2024 10:56

My honest opinion here as an openly "non-city type", is that if OXB had been vulnerable to being bought on the cheap then the PE boys would have done it by now.

I'm sure some of that argument (recently) is backed up by the cost of cheap money, but I'm equally sure that when OXB sold their buildings and ended the in-house drug development programme which hadn't made money for years, it was with an eye to the point that if they didn't do it then it would be very tempting for someone else to do it for them. But it never happened and I see that PE risk now as gone.

There's also the argument that what happened wasn't to cut off a possible PE attack, more simply that Frank, Mark, Seb, Thierry and such are all proven CDMO pros and that Frank wants to repeat what he knows (and is good at) which is CDMO not Biotech drug discovery. We might never know which was the deciding factor and it might have been a bit of both.

We all should know that CDMO sector average market cap is about 5.5x sales and for specialists in our niche it can be much more. OXB is currently on 2.4x sales and this year moves out of its phase where we had a little run of everything going wrong (Sio/Axovant going bust / the AZ contract ending a year earlier than thought / Homology exiting the CGT business / post covid biotech winter).

This year is looking pretty good (I appreciate you could be forgiven for not guessing). Next year when Boston is in full swing as a LV hub and France both LV and AAV is looking very good.

I still expect something to happen shortly (hopefully before the next quarterly review) which sees us back into the FTSE250 and then we are absolved of the last few exceptional years and can look to the future.

Longer term, I expect Novo to buy us, but they have enough money to wait until OXB has returned to being a profitable business and then offer a sum which would be agreeable to everybody (i.e. the opposite of PE where they look to buy cheap, slash and burn, then quickly sell it again).

House broker's revenue estimate for OXB next year is £171m.

A Lonza multiple of 7.6x revenue on that?

[steeplejack] 01/7/2024 09:31

Blackrock can be scamps.They build a reasonably sized interest in a stock but invariably trade in and out of a few as if to keep occupied.Yet,as Harry mentions,its unusual for Blackrock to take an interest in a small,relatively illiquid stock like OXB.Que sera,sera but it all suggests you don't want to be out of OXB as the pieces fall into shape.

[harry s truman] 01/7/2024 08:52

I'd like to know where that "industry standard CDMO" KPI table fits into things too Sean.

If they are planning on doing some kind of quasi-quarterly reporting (like the old interim management statements) then it will be sometime before the end of this month. If not then I guess the plan is to tag it on to every significant RNS which warrants a business update.

H1 was far from news free (see my post 8172 for a recap) and I think we all understand now the reason why they don't announce each new vector deal these days (else between the last two full year results we would have had 17 RNS (51-34 programmes) where it would have said confidential partner, confidential indication, undisclosed terms). So they just don't do that anymore, unless it's something out of the ordinary.

I'm more than slightly curious about BlackRock at the moment as they shouldn't be interested in OXB. That's not because there's anything wrong with OXB, it's the same reason as Buffett doesn't invest in small caps - even a good result is not worth the effort as it's not significant against billions returned with much bigger investments.

That's the logic which leads me to believe that BlackRock don't follow OXB. If they don't follow OXB then why have they bought in? I would imagine it's because they do follow Novo (much more their size of investment) and so will have heard the Novo boss say that he's going to use his windfall earnings to buy up specialist service companies to the pharmaceutical industry. It wouldn't take long to work out that Novo already hold 12% of OXB, thus a no-brainer for BlackRock to simply buy some and wait for the inevitable without ever having to bother studying OXB.

[seanje] 01/7/2024 08:03

Well were we not supposed to be getting more regular market updates? We report half yearly, so at the very least that should mean quarterly updates. We have completed first half trading so....

[harry s truman] 30/6/2024 18:55

Plutonian,

Mentioned before I know, but with the smaller OXB it was much easier to guess some things, though the deals still pretty much all came out of the blue... Today with 50+ programmes (mostly confidential) it's not so easy.

I'm very happy that they partner 3 late stage trials at the moment, remembering that Frank said he doesn't count the P2 BLA route in that column - so it genuinely is 3 at P3. Add in what might come via the BLA route and there's potentially quite a bit nearing the end of the sausage machine.

On top of that we have this recent commercial deal for multiple myeloma CAR-T and presumably something still hovering which stopped the insiders buying in that little open period after the results.

Near-term for OXB should be pretty good, but we all know that timescales in this business take as long as they take.

The upside with the recent multiple myeloma CAR-T manufacturing deal is that it's signed, and if that is CARVYKTI as you suggested a long time ago (which seems to be the only match) then we have just doubled our long term banker work which of course is Novartis.

[plutonian] 30/6/2024 14:52

Harry, yes that looks compelling - I had not seen the AGC Biologics link to Rocket.

I shall continue to watch Rocket Pharma as the news from the FDA will drop in the not-too-distant future.

[harry s truman] 30/6/2024 09:54

Morning Plutonian,

As you may have guessed, I have a running list of what I know we're involved with and then what I think we're involved with, finally some "might possibly be" names.

With OXB growing so rapidly of late, it isn't as useful as it once was (we had 35 customers at the results and firm knowledge / good clues for only about half of them), but it's something and occupies me when I'm bored.

I put Rocket in the 3rd column when you first mentioned it, as at the time it seemed an excellent fit for OXB's single partnered PIII at that time (now 3 x PIII of course), but I later thought that one much more likely to be AGC's "ProntoLVV" vector and so took it off my list again.

(this one)

(and my logic was the word "expands" in this)

[plutonian] 30/6/2024 09:06

Rocket Pharma KRESLADI (possibly an OXB vector?)

FDA has requested additional CMC information to complete its review...

[dominiccummings] 28/6/2024 19:22

It would be a surprise if all of those companies were NOT shareholders in Blackrock and anyone else of a size! Cash to burn....

[woody110] 28/6/2024 19:16

Larry Fink - Forbes

Forbes
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Search for: Who is the real owner of BlackRock?
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[dominiccummings] 28/6/2024 18:58

#8198 Well I despise their bully boy tactics at times, but if it is a case of whether I want them on my side or the other side, I'll happily accept them on 'my side'.

So they are buying and accumulating.... what will be their end game.

[harry s truman] 28/6/2024 18:28

Blackrock again

[harry s truman] 28/6/2024 10:18

OK, and now my Radio 4 thought for the day...

Today is of course the end of H1 and in September we'll get to see the interim results from close of play today.

For reasons I've done too many times now, I'm convinced that the OXB story is excellent (even if the share price isn't) and that we can get a good idea of this from circumstantial evidence like the job ads.

Today I want to do a reminder about Yarnton.

Old hands know that Yarnton was leased for the period when Harrow House was too busy and OxBox was still being planned. So a short-term lease as a stop gap and I believe (just my recollection here) and has been used as a dedicated Novartis facility since.

The Yarnton lease was always stated as being up in 2024.

The savings of simply moving that into OxBox would be large (many duplicated costs of two buildings over one).

But I think if they were winding Yarnton down this year that they would have told us by now - because winding down and moving everything to OxBox is a big job.

Not only that but at the end of the lease term Yarnton would have to be back to its original condition (so all the clean room kit out and the shell retuned to pre-lease which is not quick or cheap).

With no clue anywhere of that happening - coupled with previous OXB messages about Oxford being at capacity - I'm struggling for a better explanation than one where an abundance of work has dictated that OXB extended the lease beyond 2024.

If so then another good sign.

[harry s truman] 28/6/2024 09:27

super,

It's all fine and I have enough sworn adversaries on here without the need to look for any more ;)

Ironically it was the funds which inadvertently screwed us last year. Maybe you remember and maybe you don't but we were ticking along nicely with a share price which was remarkably close to a CDMO average of 5.5x sales (reduced sales after our bump) when suddenly there was a lot of traffic on here (and particularly badger's thread) that the end was nigh and we were going bust.

A lot of selling followed but it was later explained by someone with far more knowledge on this than me that there was a US fund which couldn't hold stocks of less than a certain market cap (their fund rules) and the boys in the shiny suits had worked that out.

This fund was forced into selling their OXB stake from August onwards and look at the positions taken in advance of that

So money was made out of someone else's misfortune and as usual small investors had no idea what was going on at the time.

Even worse, the rumour at the time (I can't confirm) was that the shorting against the forced seller dropped the price so much that a second fund had to sell and the shorters got 2 bites of the same cherry. Good for them but not for us.

As soon as that ended then the doom posts on here and badger's thread stopped and haven't returned, but of course that will just be a coincidence.

Along the way big funds like Liontrust were having record redemptions and having to sell across their portfolios. None of it helped.

The final straw seemed to be OXB booted from a MS index which I'd never heard of because of market cap, but since then the posts of doom have been non-existent and of course we're still waiting for the actual bad news (from anybody) about OXB itself - rather than the misfortune of its large shareholders.

All of this time though, Blackrock seem to have been hoovering up the shares which were available to those with patience and deep pockets (3.47m shares added to their existing holding according to the FT).

One difference I have noticed with the funds is that whilst the most we ever get from them is the mandatory holding RNS, with Novo, Serum and recently IM, we actually get more of the story e.g.

[supernumerary] 27/6/2024 23:23

I won't labour the point, but note that family offices are usually run by professionals who are given a high degree of independence, and who are more concerned with overall performance than with that of any individual holding.

As regards valuation, I'm sure you're right that OXB is undervalued - that's why we're all here of course - but there's usually a reason for chronic undervaluation. It's easy to say it's just the history, but I always remember the old saying - the market can remain irrational longer than you can stay solvent. It's not easy to change that sort of perception and I don't have the impression that the management are much inclined to start banging their own drum.

Anyway, I hope you're right and £15 is a possibility, but I'm certainly not putting it in any of my spreadsheets!

[harry s truman] 27/6/2024 21:01

Super,

I'm happy with your points, but just a couple of things I want to be clear on.

Serum aren't a fund, they are a private family company and world's biggest vaccine company. The guy who put £50m in essentially put his own family money into OXB and wants to be part of the future (in a similar way to the Merieux family recently, but different reasons).

OXB is on the naughty step because they lost a pandemic customer which was 87% of their work, then used a combination of cash, shares and loan to buy some guaranteed work in at the same time as rights to a vector for a bigger market. The company who provided the guaranteed work which came with that deal then went out of business.

Today OXB have market cap of £300m and sales this year will be minimum £126m. So we are on a multiple of 2.4x sales.

Last list I saw for CDMO for comparison:-

Lonza 7.6x
Avid Bioservices 10.1x
Catalent 6.5x
Vigene 9x
Cognate Bioservices 6.3x

Now that's a little bit out of date because obviously Novo have recently bought Catalent and Charles River bought Cognate, but OXB is way undervalued at present and as pure CGT should command a multiple at the top of that table (if not higher) as specialist viral vector companies are thin on the ground. Specialist viral vector tech owning CDMOs? Even rarer.

OXB off the naughty step, rehabilitated in the market as a profitable CDMO with appropriate multiple - then the bid premium. It would be a lot of money else the major holders would just say no.

[supernumerary] 27/6/2024 20:30

Harry - I share your optimism about the future prospects for the business, but not your view on a buyout. I don't think the price Sarum paid for their shares will count for much in the event of an offer. PIs are always anchored to their buy price, but IIs generally mark to market (indeed, in some cases are legally obliged to - that's how funds calculate NAV) so they hold shares at current value.

In any case the fund manager at the time of buyout is rarely the fund manager who acquired the holding so there's no ego involved - 'it's not me selling too low, but him buying too high that's the problem - on my watch it's doubled and I'll take that, thank you very much'.

So doubling the share price at the time of any offer would be an excellent result - look around to see how often that's bettered - and £15+ is (as things stand) somewhere off in La La land. There's no more certain way to disappoint than to set expectations too high.

[harry s truman] 27/6/2024 19:36

Kyri's Mrs GH, so I would have thought it's not about the money. Don't these things have expiry dates?

[gutterhead] 27/6/2024 19:08

Pippa only sold 800ish shares.
Maybe she just needed the money…

[gutterhead] 27/6/2024 19:08

Pippa only sold 800ish shares.
Maybe she just needed the money…

[dominiccummings] 27/6/2024 18:59

Well either Pippa is a very stupid girl to accept £3, has been told there is no news imminent that would drive the share price up, or has been obliged to cash in before expiry.

Which is it?

[harry s truman] 27/6/2024 18:39

I agree with you there Ygor, but would just add that a lot of the investment managers can't buy smallcap and so will have to wait anyway.

Sliding off sideways into another passage from the memoires here, whilst I've always had both hopes and expectations for OXB (so two different targets), those have changed as OXB has changed - and over the last couple of decades OXB has changed a lot.

Had TroVax succeeded in its PIII trial then it would have retired quite a few of us from that time very early. It didn't, but if there wasn't the risk of this then there wouldn't be the reward either.

The 20 year older me likes the idea of helping with 50+ customer programmes much more than the 20 year younger me wondering how the patients are doing on one of our own in house trials on which everything hinged. Yes the ultimate reward will be less than it could have been but so is the risk (now spread across 50+ programmes).

So I sit here quite happy knowing how much capacity we have in France, America and the UK, safe in the knowledge that Seb's sales team is possessed with the goal of filling it all.

I have a mindset of holding shares forever. Obviously a sweeping statement there, but I do tend to hold all my shares for a very long time if I think the company is sound. A trailing stop loss when the world panicked at the end of the AZ vaccine contract would have been a much better strategy with hindsight, but I never imagined OXB would drop lower than the pre-covid price when they were sat on a massive covid cash windfall. We live and learn.

I still hope to hold OXB as a very profitable market leader one day, but after reading the Novo boss explain that he's going to use his weight loss drug billions to buy up speciality service providers to the pharmaceutical sector, and remembering that he already owns 12% of OXB, I'm sort of resigned to the fact that one day in the not too distant future OXB will be a Novo company.

If that happens then so be it and it saves me a decision which I would take far too long over.

Novo are awash with money (their profit was $3.65bn last year and they are forecasting +20 to 30% on that this year).

As far as I know Serum are the major shareholder in at the highest price (3% at just under £15 per share) so I guess an offer which they are happy with would have all the other major holders agreeing too?

This all leads me to think that somewhere in our not too distant future there is a combination of revenue forecast and buyout multiple (of that), where Serum thinks it's enough and it also doesn't look like Novo is paying too much. What that figure would be (or when) I've no idea, but I don't expect Serum to take a loss on their shares.