Could this company be the next hot biotech share?
After the excitement of watching grey hairs getting hot under the collar at Mears 2009 AGM on Wednesday 3 June, I attended a much more civilised event at Buchanan Communications the following day -- the 2009 AGM of a company that could turn out to be the next Abcam.
Abcam?
Abcam (LSE: ABC) is an AIM–listed, Cambridge-based company with the largest catalogue of the best antibodies in the world. This wonderful database of goodies has allowed them to produce excellent results over the last few years, and as a consequence its share price chart is a thing of beauty. Sadly I have been a spectator, always waiting for the share price to stumble so that I could 'jump in'. Currently the shares are trading on a P/E ratio of over 30.
Nevertheless I have been on the lookout for the next Abcam -- and Asterand could possibly fit the bill.
Asterand?
With a market cap of £30m, Asterand (LSE: ATD) is the leading global supplier of human tissue and human tissue-based research services to pharmaceutical companies engaged in drug discovery and development. 2008 was a very good year for Asterand. Some of the highlights:
- revenue doubled, at the same time operating expenses reduced;
- profit for the year was £3.9m (2007: £1.9m loss);
- basic EPS was 3.53p (2007: 1.83p loss);
- cash resources were £6.9m, and there was no long-term debt; and
- five new non executive directors were appointed and the CEO and CFO are also recent appointments.
It is perhaps not surprising that Asterand was the one of the best performing shares in 2008. Some lucky souls bought in at 6p, and the share price finished the year at 15p and is now trading at 27p. Being a muppet I only became aware of Asterand's stellar 2008 performance when its results were announced at the end of March, although the company flagged that the results were going to be good in November of last year.
Digressing slightly: hats off to Buchanan Communications. I often don't have much time for PR advisers but Buchanan do seem to be a clever bunch of lads and ladies, they provide clients with the ability to webcast their interim and full-year results (I am told at a very reasonable cost).
I personally find it tremendously useful to be able in the comfort of my own home to have the option to listen to webcasts and, at the same time, access the relevant slides. Have a look at Buchanan's website for a list of clients who have used this facility. Asterand have made use of it, and there is a link on its own website to its latest results presentation. It is well worth listening to and the Q&A session is also available.
Back to the AGM. Buchanan's is located next door to Moorgate tube station. The kick off was 10am and there were no problems gaining access to the AGM. The meeting was well attended -- say 20 people.
The chairman is a cheerful soul. A general point on AGMs -- the chairman dictates the tone of the meeting. They are invariably male (the only female chairman that I can think of is Lady Louise Patten at Brixton), often in their 60s, and there can be a problem if they have never come across private investors before. If this is the case, employ all your social skills.
Questions, questions, questions
I asked once the first resolution had been read out when would be the best time to ask questions and was told that there was going to be a presentation afterwards and questions would be welcomed at that time, which I have found in the past is the ideal setup.
As a result we whistled through the resolutions. For some strange reason, possibly because I was once an auditor, I always query the audit fee -- is it too high or too low, will the senior partner in charge of the audit be rotated every five years? I do this to add some excitement to the lives of auditors because they invariably make the effort to attend the AGM, and I would hate them to feel ignored.
Martyn Coombs, the company's CEO, gave a brief presentation. This was followed by another, more technical presentation, by a young lady working for Asterand Inc (whose name I didn't catch). Useless but interesting fact for dog lovers: dogs are allergic to the following foods -- grapes, chocolate, coffee, onions and avocados. These facts arose from a discussion on why it is better to test compounds on human tissues if looking for drugs to treat human ailments. It is amazing what one learns at AGMs.
I was very impressed that Asterand had planned to make two presentations at the 2009 AGM as only one private investor attended the 2008 AGM. This year three investors turned up including Omega, who holds over 5%, and who have been recently top-slicing. A number of employees were also in the audience together with a few suits, plus, of course, the auditor.
The Q&A session was very relaxed and, because there was no red wine in evidence, no one was getting restless when I asked my tenth question. Bottom line, Asterand seems to be line with market expectations, with EPS anticipated to be around 1p for this year.
Warm feeling
I came away from the meeting with a warm feeling towards Asterand. The directors are good at communicating and welcome enquiries, they are very proud of what they have achieved and what they hope to achieve. They are also operating in a sexy area of business -- according to Time magazine, biobanks are one of the ten ideas that are changing the world right now.
Perhaps the Asterand share price is getting ahead of itself. It doubled in 2008, and has almost doubled in the first half of 2009. It is interesting to note that the most recent Edison Investment note, 15 May 2009, has a target price of 27p (it is on Asterand's website). Daniel Stewart, Asterand's joint broker, also has a target price of 27p in a research note dated 30 March 2009.
Currently the share price is... 27p. Perhaps we will see the share price treading water for a while unless Asterand announces another blockbuster deal sometime soon. Followers of the company are hopeful that eventually another contract will be announced with the US Department of the Defence, who are reputed to have a very large number of human tissue samples.
In the meantime, Asterand seems to be ticking along quite nicely. Apparently, it is also a nice place to work.
In conclusion an enjoyable event, and much more typical of an AIM company AGM than Mears. Asterand's directors were happy to talk, the investors asked good questions, and there were fresh muffins to eat after the formal part of the AGM had been completed.
> Alice's AGMs: Mears Group
At the time of writing, AliceInWonder held shares in Asterand.
