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Neptune Technologies & Bioressources, Inc. Message Board

  • badlandz2012 badlandz2012 Jan 12, 2013 8:07 AM Flag

    Neptune earnings

    Neptune has been growing its neutriceutical business from scratch. Only in the last few years have revenues jumped over $10M per year. They were targeting $30M-$40M plus next year with the new plant expansion (which was substantially already pre-sold/committed to customers). That will now be deferred for a year. When the plant (s) re-open they will hit the ground running (with huge pent up demand) plus the opportunity to come from third party contract manaufacturing deals soon to be announced.

    The reason for negative earnings, is due to 1) lack of critical mass of revenues (due to early stage business growth - which was ramping up before the 'incident'), 2) significant R&D costs ($5M-$10M per year) for its two subsidiary companies (including the potential wonder drug CaPre which is now in Phase 2 clinical trials)(these R&D costs/losses must be consolidated within NEPT's results), and 3) Stock option expenses (as like any junior biotech, the Share Price was rising well in advance of earnings, and thus you are required to keep accruing the benefit as the share price keeps climbing). Some of this stock option accrual may now be reversed in the short term.

    As of their Q2 Results (August 31/12), prior to the 'incident' which will be reflected in Q3, Neptune has negative cumulative retained earnings of $37M. As a comparison, Amarin (AMRN) which completed its FDA approval (for a similar wonder drug Vascepa) last spring, has $700M in negative retained earnings.

    So all in all, given the more junior stage of Neptune in its development, $37M in accumulated losses isn't all bad. Now let's see what the financial impact of the 'incident' was in their upcoming quarterly results release this week.

    Sentiment: Buy

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