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  • investora2z investora2z Sep 27, 2013 9:20 AM Flag

    SA article

    An article on SA recommends to buy Biozone for its large upside potential and limited downside risk. The author has analyzed the company from different perspectives based on an interview with Brian Keller. He himself has taken a position in the stock. He considers it to be undervalued considering the potential of the QuSomes drug delivery technology and the prospects of the contract manufacturing business. The technology is expected to allow BioZone to reformulate and sell certain FDA approved drugs at a reduced cost, which can potentially help BioZone capture a large percentage of these drug markets. QuSomes are less expensive, easier to make and more versatile. For injectable drugs, the Qusomes help in drug circulation for a longer period in the bloodstream, resulting in efficacy at lower doses. This reduces the side effects also. On the other hand, the phospholipid-based liposomes are unstable, expensive, and difficult to formulate. One of the first prescription applications being tried by Biozone is Voriconazole, which is a first-line therapy for systemic fungal infections. However, it needs to go through the required trials and approvals. The processes may take 2 years and cost the company around $3 million. The other drug is docetaxel (for cancer), which again is highly insoluble. Both these drugs put together have an addressable market of more than $3 billion. The ultimate pipeline of the company could approach 20 new products. Importantly, the company may come with these drugs at a 20%-30% discount and still be very profitable. The contracting business may also become profitable next year due to the recent agreement with MusclePharm. The revenues are expected to be around $20 million in 2014. The article mentions several other factors in support of an investment in Biozone, but also mentions some risk factors for which the article needs to be read in totality.