American patent approval has given Oxford Biodynamics (OBD) scope for major expansion in the US – the world’s biggest healthcare market. During the half-year the group signed two collaborations with major US pharmaceutical companies in the fields of fibrosis and immuno-oncology – two fast-growing areas of medicine.
Aside from bringing in new revenue, these collaborations are likely to spark further partnerships as they will raise OBD’s profile. For example, in December, the Journal of Translational Medicine published the successful findings of the group’s arthritis project with Pfizer. Thus, broker Shore Cap expects revenues to accelerate to £4.7m in the 2019 financial year and £12.5m in 2020 – a 10-fold increase on 2018 forecasts.
To cope with this anticipated demand, management has planned a £0.5m investment in its UK labs. The project may expand net capex slightly, but considering the group’s net cash outflows only amounted to £1.2m in the reported period (minuscule for an early-stage biotech company), there is plenty of cash available for expansion plans.
In fact, staff costs of £0.9m are far and away OBD’s biggest expense – more than general admin and research costs put together. And although the headcount is increasing, house broker Shore Cap is confident the revenue growth will offset that. In the year to September 2018, adjusted pre-tax losses are expected to narrow to £2.7m, from £4m last year.
| OXFORD BIODYNAMICS (OBD) | ||||
| ORD PRICE: | 216p | MARKET VALUE: | £189m | |
| TOUCH: | 210-218p | 12-MONTH HIGH / LOW: | 278p | 137p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 12.3p | NET CASH: | £9.6m | |
| Half-year to 31 Mar | Turnover (£000) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 384 | -2.74 | -3.1 | nil |
| 2018 | 473 | -1.36 | -1.3 | nil |
| % change | +23 | - | - | - |
| Ex-div: | na | |||
| Payment: | na |
