Xoptimist. Yes, but think of it as being an OXB takeover of some Catalent sites, financed by Novo. It answers questions as to board changes and confidentiality maintained. |
Or, look at it differently. Who would Novo acquire to inject expertise, management and intellectual property into their C> sites that are performing poorly? |
 Xoptimist,
I think it depends on how you value the company, which I appreciate is stating the obvious.
We do know that the "average" CDMO should trade on more than 5x sales and an average CDMO isn't one which owns the patents on the LentiVector which is key to one approved treatment and a whole bunch in late trials.
What do we currently trade on with our market cap today of c£450m? A little over 3x. What if Novo simply accept that OXB is worth a lot more than its market cap and realise that there are enough shares in very few hands to stop a cheap bid - which has never happened during much worse times?
Today Samsung Bio (a very specialised CDMO) trades on 16.29x sales and nobody complains.
In a couple of weeks we go into a year where Frank said the sales would be better than +35% on this year. That basically means £180m but it might be better.
What if our major shareholders say that they want a bid premium on top of a fair valuation which the market price doesn't reflect?
I'd agree wholeheartedly that we would be in the hands of others, but I seem to remember that 13 holders have 70% of OXB. Admittedly one of those is Novo with 12% but most of the others against and it's still no - which is (I suspect) what kept the p/e wolves from our door when things were much worse.
5.5x 2025 sales is probably £10 per share and what if our major shareholders say they aren't prepared to sell for sector average and want compensating with a better valuation and bid premium?
I of course don't know and don't pretend to.
I agree with Dom's point in that Novo are in the happy position of being able to bid billions without visiting a bank for a loan or visiting a city firm for a placing / fundraising, so where would the leak come from?
Mentioned here before that I have no evidence other than circumstantial, but:-
The Novo Holdings boss has said they will buy specially selected bio service companies (like OXB which they already thought worth buying 12% of).
OXB has been extremely quiet and for the first time I can remember not a single insider has bought a share in the year (since Novo bid for Catalent).
Yes Catalent shareholders overwhelming accepted a low bid premium from Novo but they also knew that they were on a sticky wicket without Novo's money - which does sort of beg the question of how Novo plan to make a business success of that other than by simply throwing more money at it?
There are two sides to this, but let's forget about Catalent for a minute and say that Novo harboured desires of entering the Cell and Gene Therapy sector via OXB, then how do they make that work for them better than it has worked / is working for OXB? Surely the answer is simply scale, and on a scale which OXB wouldn't be able to afford alone anytime soon?
Flip back to Catalent and (if you believe the official version) then Novo only wanted Catalent for the 3 pen injectable sites which solve a supply shortage for their mega-selling weight loss drug.
Why didn't Novo just bid this notional $11bn for the 3 factories they wanted in a simple transaction / trade sale which happens a lot in the pharma industry and save themselves a lot of trouble?
I think there are two possible answers to that, with one being that Catalent said a firm no to them cherry picking, making it all or northing, or...
Novo thought, 2 birds with one stone - we buy the lot, sell the pen injectables to Nordisk then merge OXB with the Catalent C> / C> capable plants. Maybe the rest they will keep to run as a big CDMO or plan to slowly sell off the individual sites as and when that makes good business sense.
So yes I am guessing, but there is some supporting evidence behind it - even though it is circumstantial.
If Novo Holdings are keen to diversify into CDMO and are sold on those future forecasts for C> CDMO market size, then there is some logic in the business case here. |
You can be sure of it Dom. The other thing you can be sure of is that the big boys will, as always, get their own way and make it happen their way. We can only sit back and watch the show ....... |
I wonder if the activity every day at close, surely designed to stop the share price rising, is to make whatever premium is paid look better than it otherwise would? |
Xoptimist. Since everyone likely to be involved is already inside the company, Novo will not need bankers to progress the deal, and they already would have lawyers working on the Catalent deal, there is no need to expect a leak.
The only issue for Novo and our Chairman is what sort of premium is needed to satisfy the Vulpes, IM (who overpaid for the deal), and Serum who paid at the top of the market. Even 4 or 5 times the present price compared to the price they paid for Catalent is trivial to acquire IP and management to run their new group and transfer technology and good practice. |
Thanks Harry. I always find on the rare times that I disagree with you that I actually rather hope that you will turn out to be more right than I am.
I see last year's Dec 7th RNS as Frank desperately trying to shore up shareholders in uniquely troubled times and prevent further selling and disintegration of the share price (which had fallen 50% since June) as he worked hard to complete the important IM deal. And I think we are now back to more normal/vanilla quarterly reporting. But lets see....
On a possible bid by Novo once again wouldn't it be lovely if we got a robust offer. But with Novo having a deep insider knowledge of the top institutional shareholders'expectations they will know that anything less that 1200p isnt going to fly with Vulpes, IM, Serum and Mr Shah - and that would be a staggering almost 300% premium from where we are today and way beyond the 16.5 per cent premium above market they paid for Catalent. I like the speculation but there are no facts here or even rumours or whispers of rumours. I see this as highly unlikely in the first half of 2025 but once again a big part of me hopes you are right. Lets see... |
Managed down again at close.... |
It would be lovely to get a Christmas present from OXB in the form of a positive update before year end but I think its much more realistic to expect an update via RNS on 2024 results and 2025 guidance somewhere between the third week of January and the second week of February. Whilst its true that Lucy will already have a fairly solid idea of 2024 revenues it will take a bit more time to be able to give a reliable ebitda figure (which we know will be negative). I also think Frank and Lucy will want to interrogate Seb robustly on the 2025 sales pipeline and have as much time as possible before they have to pin their colours to a mast with a revenue number for 2025.
I think we can all be fairly confident that the company has made its revenue guidance numbers for 2024 and probably at the higher end of the guidance range. It has missed Stuart's April forecast of more or less break even as cash burn has been higher than anticipated - but hopefully ebitda will be negative by no more than single digit millions.
I also think we can be confident that we are going to have a great 2025 and I believe revenue guidance will be at least GBP170-180m and with a return to profitability. So by this time next year revenues should have doubled in 24 months.
Finally I think we can expect that the 3 year rolling forward guidance will be re-based on the 2024 numbers and so forward 3 year CAGR will fall from 35% to 25-30% but with early forecasts for 2026 revenues of ca GBP225m.
So many potential OXB investors are waiting in the wings to see Frank hit the first year of his recovery guidance and once that is in the bag (and profitability close by) I would think this news should be worth at least 100-150p on the share price taking us to the mid to high 500s by February and hopefully drifting into the 600s by the time of the annual results presentation in April. And so back into the FTSE250 maybe in Q2 but definitely in Q3.
For the many of us here who have hoped the company would develop a much better PR/IR/Comms strategy with a steady flow of news to keep investors engaged and excited - I think that we are going to have to accept that won't happen and in the words of someone in this community our Comms people are going to continue to be noticeable by their resounding silence.
As such we are going to have to depend on the quarterly updates - which hopefully will be formalised into a transparent and regular reporting calendar which follow the quarters: end of Jan/end of April/end of July/end of October - and which will be essential as the company looks more to the US investment commnunity. And we are going to have to depend on continuing to play Cluedo sleuthing around (as Harry does so brilliantly) the tidbits of information we are given but always guessing and never sure of exactly what game is afoot.
As such we should maximise opportunities to interrogate and question the management team whenever we have the opportunity to do so. And otherwise practice what for me is always difficult - patience.
In the meantime as the year draws to a close may I thank all of you in this OXB community who have helped to educate and entertain me this year and wish you all a fabulous festive season.
Happy holidays. |
Good question Sean.
I would have thought that OXB know the revenue figure for this year to the penny now (unless there are some invoices out there which are due in the next fortnight and still to be banked).
But would they say anything other than "on track to close the year in line with previous guidance" (or similar)?
If we get a news RNS then I would have thought they will tag a trading update on there, but then we're into the odds of news in the last week before Christmas.
I appreciate that it seems a bit contradictory, but long before OXB give us the 2024 preliminary results at the end of Q1, what the market is really interested in is the guidance for 2025. We saw that first hand when the price dropped before the record 2021 results and all through 2022 on the end of the vaccine contract.
Happily we are basically looking at the reverse of that this time (loss for 2024 / record revenue for 2025). |
Are we not due a promised quarterly business update? Wouldnt that be a good time to release news? |
Appreciate that we've already done the shepherds having the chat with the angel of the EU competitions regulator. Surely this today is the star in the east for OXB? (Copenhagen being east for those of us in Blighty at least).
www.catalent.com/catalent-news/catalent-and-novo-holdings-fulfill-all-regulatory-closing-conditions-for-pending-transaction/
Not long now imho until the wise men (and female men, before someone starts a petition) begin loading the gold onto the Camels. |
Mr 230p let us down this evening then...... |
Incredible, trading this afternoon. 10p drop in price, over 200K shares traded in 420 deals. Will it finish at 430 at 4.30? |
There are some real Shenanigans going on today between the market makers in OXB .
Unusual price action . I suggest it's possibly going to break meaningfully one way or another but my sense tells me it will be "higher ".
Tuco. |
Or two 'people' (banks) working for the same client? |
Maybe they are one and the same person. |
Last few trades continue to illustrate we have a buyer who seems to only want to buy at exactly 4.30 max and a seller who will not sell below exactly 4.30 min....quite strange form of headlock for the share still... |
Let's not. I'd far rather see OXB grow it's revenues to close to £300m over the next 4-5 years, building a growing portfolio of royalties on multi- billions of third party sales based on it's technologies, and being rated in the markets accordingly. |
Let’s get a bidding war going! |
Aside from internal overhauls, Lonza will also seek to “elevate the importance of bolt-on M&A,” while adopting an “impartial view on organic and inorganic opportunities for future growth,” the CDMO said. |
Well there we are. 4.30 at 4.30pm! I just can't wait until tomorrow!! |
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