Been in NBS for quite a while.
Know about it's potential.
Know about it's management.
Know about AMR 001.
Know about the PCT business.
Here's what I'm thinking--- if you're big Pharma and you want to get involved in the cell therapy space (obviously a dramatically growing sector of biotech), what would be some viable options?
1. Starting from scratch. Trying to recruit talent from a very small pool. And attempt to develop therapies with the knowledge that you're already behind in time (concept to finish -phase 3- is at least 5 years) and money (development costs of a new cell therapy, from concept to execution, can easily exceed hundreds of millions of dollars). That doesn't seem like the most productive or prudent way to go about things.
2. Partnering up. I think this holds a lot of promise. Every single company in this sector is a cash flow loser. (although NBS is the ONLY company that could actually be profitable this year) Every single one. Money goes out. Nothing or very little comes in. What's the solution? More offerings. More shares. Lower pps. That's been the theme. Hey, we all know this is a developing technology. And whether we're talking about computers in the '80s or storage/search companies in the '90s or the cell phone/mp3 space of the 2000's, there is always a period of time at the beginning when the numbers are reversed. No income. Lots of costs. The stem cell therapy sector is no different.
Lots of companies are desperate for cash. Sitting on a developing therapy with the potential to be a blockbuster. For big Pharma, it might be beneficial to consider a partnership with a cell therapy company that meets certain parameters. And in my opinion, 2013 will see quite a bit of activity in this space.
3. Buyout. Ok. Here's where I think there is 1 (one) real opportunity for big Pharma.
It's exciting. I get a little shiver just typing this.
If you are big Pharma and you want to get the DOMINANT position in the cell therapy space (going from zero to 60. No screwing around with partnerships with financially struggling biotechs that might or might not have a therapy that pans out. But rather an INVESTMENT that immediately takes you to the pre-eminent position in cell therapy biotech) then you'd want to buy out NBS.
There. I said it.
Every step of the way. AMR 001 has met its goals. Has exceeded expectations. Following a similar therapy by Baxter (although substantial differences), AMR 001 is poised to be a billion dollar blockbuster by 2016.
And thanks to the industry wide respect for the abilities of PCT, NBS' revenues will continue to grow.
Last year, PCT generated over $10 million in revenue. Far and away better than any other company in this sector. And those numbers are increasing exponentially. Based on the quarterlies, PCT should generate close to $20 million in revenue for NBS in 2013...making NBS a profitable company.
So if you're big Pharma and you want a footprint in this sector, there really is only one play.
Market capitalization is only $100 million. Chump change considering the solid financials of the company as well as the blockbuster potential of AMR 001.
What would be a fair buyout price?
Usually there is a 3-5 times metric involved based on potential earnings. But I don't think that applies to a development company in this sector.
Perhaps an offer of 6-10 times current market capitalization based on the aforementioned reasons.
That seems reasonable for a DEFINITIVE move into the cell therapy space.
$600 million to $1 billion.
Share price of $3.60 to $6.00.
What are your thoughts?
Sentiment: Strong Buy
I could see CELGENE coming into this area in a big way. They have a history of making big acquisitions. They might want to buy in the next two years. There are quite a few stem cell companies out there already. I'm not going to guess who CELG would buy.
CELG would buy more than one company.
What's their exact history/relationship with PCT? From memory the own PCT outright correct? If so assume they bought them and did not merge? You can yell do your dd if you're in that kinda mood, if not thanks for any clarification..
Great post summarizing the value of NBS. Re a buyout share price, I wouldn't want it to happen before we get to a PPS of $6 or more. Right now, even ten times is way too cheap. This will be a $100 stock, perhaps more, as the therapies get approved and PCT is the go-to lab for all the developmental stem cell companies. JMHO
Sentiment: Strong Buy