Bioventix bullish on R&D prospects

Monoclonal antibodies, or clones of a single antibody, are a key component of many clinical diagnostic tests. Surrey-based Bioventix (BVXP) is a supplier of sheep monoclonal antibodies (SMAs) for use in a variety of human blood tests around the world. It might sound like a niche line of work, but the company saw progress across the year to the end of June in a way that many other biotechs did not.

The company reports that its most significant revenue stream continues to come from a vitamin D antibody known as vitD3.5H10 – which is used to test for vitamin D deficiency. Sales of the substance were up 7 per cent to almost £6mn last year.

In addition to the physical antibodies themselves, the sale of diagnostic solutions based on Bioventix products means the company also receives royalty payments. These account for some 70 per cent of the company’s annual revenue, according to its full-year results.

After the initiation of a new project, either with a partner firm or on its own, it takes around a year for Bioventix scientists to create a panel of purified antibodies for evaluation by customers. From there, it can take years for new diagnostic tests made with the antibodies to receive regulatory approval. This means that revenue for the current accounting period is actually derived from SMAs created many years ago.

Bioventix estimates that current research work in its labs is likely to generate sales between 2028 and 2038. In the meantime, the company forecasts continued growth in revenue from its troponin antibody, which can be used to diagnose heart attacks. Bioventix has a contract with Siemens (DE:SIE) to supply the substance for use in its diagnostic tests until 2032.

Strange as sheep antibodies might seem, it’s clear they’re in demand. Buy.

Last IC View: Buy, 3,400p, 26 Oct 2022