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A biotech startup already yielding 6.4% – MoneyWeek

Inmyopinion,Bioventixisjustthesortofbusinessthatweneedmoreofinthiscountry。

Itisbasedonrealbrainpower,itsellstobigoverseascustomersanditisinanindustrythatissuretogrowovertime,whateverhappens。

Theidiot’sguidetoantibodies

ChiefexecutivePeterHarrisonpatientlygavemeanidiot’sguidetohiscomplexbusiness。

Bioventixmakesantibodies。

Antibodiesareproteinsthatareproducednaturallybythebodyinordertofightforeignentitiesknownasantigens。

Antibodiesfindtheseantigens,andthenclingontothem。

LikeaYalekey,antibodiesareveryindividual–oneantibodywillbindtooneantigenonly。

Sothemethodofdetectingwhetheryouhaveantigensinyourbodyistotakeabloodsample,andthenexposeittoantibodies。

Ifthereareantigensintheblood,theywillclingtotheantibodiesandthuscanbeidentified。

Theseantibodiescanbemadeinthelaboratoryandaretypicallyderivedfrommice。

Bioventixcallsitselfthe‘Thesheepmonoclonalantibodycompany’,andbelievesthatbetterantibodiescanbederivedfromsheep。

Theabilityofsheepmonoclonalantibodiestoremainboundtotheirtargetis,Bioventixclaims,100timessuperiorthanformouseantibodies。

Theyarealsoabletorecognisetargetsthatmouseantibodiescannotrecognise,andaremoreeffectivewherethetargetsareveryscarce。

Revenuestriple,withmoretocome

I’mcertainlynotqualifiedtopassjudgementontheseclaims–butthankfullythemarketisdecidingforus。

Bioventixsellsitsantibodiestohospitals。

EverytimeatestisrunthatusesoneofBioventix’santibodies,itgetsasmallsum。

Althoughthismaybeonlyafewpennies,itmeansahealthyprofitmarginforBioventix。

Oncethesetestsareestablished,they’reusedindefinitely,givingthecompanyanenduringcashflow。

Bioventixhastripleditsrevenueinthelastfouryearsandmovedfromalossintoaprofitbyaddingtoitsstockofantibodies。

Furthermore,itcloseditslatestfinancialyeartoJunewithcashof£1。

53m,upfrom£1。

35m12monthsearlier。

Thisallowedittopayagenerousdividendof11p。

Attoday’ssharepriceof192p,thatoffersahandsomegrossyieldof6。

4%。

Thecompanyisvaluedat£9。

6m。

ThesharesaretradedonPLUSmarketsandadmittedlysufferfromahighbid/offerspreadof10p。

Theshareregisterisalsotightlycontrolledbythemajorholders。

However,Harrisonassuredmethatthesemajorholdershaveundertakentomakesharesavailabletoanyprivateshareholderwhowantstogetinvolved。

Bioventixhassomerealexpertiseandagoodtrackrecord,anditshouldhaveabrightfuture。

Sofaritissellingonlyfourantibodies,butithascreatedeightmorethatcouldbeonthemarketwithinthreeyears。

Addthesetoitsexistingrevenuestreamsandprofitsshouldriseovertime,whichmakestoday’sstockmarketvaluationlookevenmoreattractive。

BasedatFarnhaminSurrey,BioventixisanexcellentexampleofthesortofopportunitythatistoosmalltointerestCityfundmanagerswithmillionsofpoundstoinvest。

Butforaprivateinvestorwithafewhundredpoundstoinvest,awillingnesstotakealongtermview,andanappetiteforanicedividend,Bioventixmakesatemptingtarget。

I’llbewatchingitsprogresswithgreatinterest。



ThisarticleistakenfromTomBulfordsfreetwice-weeklysmall-capinvestmentemailThePennySleuth。

SignuptoThePennySleuthhere。

InformationinPennySleuthisforgeneralinformationonlyandisnotintendedtoberelieduponbyindividualreadersinmaking(ornotmaking)specificinvestmentdecisions。