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Author: whatismyoption Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19136  
Subject: Biota BTA.AX Date: 11/2/2008 5:08 AM
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Biota's pipeline and getting to management http://www.fusioninvesting.com/blog/2008/11/biota-under-the-...
I've started a graphical pipeline time line and key milestones.

Big picture is BTA’s pipeline and product provides an acceptable margin of safety as current prices reflect cash on hand. It's not the largest MoS possible and management may be a risk as most management are. Great risk/reward profile. Buying around cash and close to cash flow positive is good value. You get the pipeline and revenue stream for free for taking the risk of dying Relenza and LANI

Am I right on this change in trade assets? Any thoughts on that?
The 2008 B/S shows a drop in trade receivables of $5M and a rise in trade payables of $6M. Cash flow from ops was +4.8M. Though how about that $11M swing in trade assets on the B/S? Does that make it a $6M operating cash loss?
Alternatively, backing out interest of $3.2M it's $1.6M net operating cash.

It also has another likely kicker and risk of Fx. USD has moved so quickly, it may be worth considering investing in assets based in strong countries like Australia. The current AUD:USD at around .66 (wow it was .60) is below the long term trend of 70 cents.

While a great manager is a definite benefit, you simply do not get the chance the buy biotech around cash flow positive around cash in the bank with a top notch management team at the helm. Getting the first two with many possible upside catalysts is acceptable to me while I form an opinion on management. If you ever see a biotech with all four please let me know; selling for cash, cash flow neutral to slightly positive, good pipeline and great management.

Within biotech investing this is as close to a value buy as I’ve seen for a long time. BTA.AX has a good reward to risk profile, several possible catalysts, and is the best value lowest risk it has been in years. Management and a question over strength of cash flows from last year are flagged at the moment.

things to consider:
- what price will BTA fetch on one good quarter of Relenza results? What is the likelihood of at least one good quarter?
- what price will BTA fetch if we get two more poor Relenza quarters? A failure in one of their pipeline compounds?
- other likely scenarios.
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