Industrial Biotechnology Corporation (IBTY)
IBTY is alone in a Gigantic Market Opportunity that just keeps getting Bigger!!!
Why? Wall Street has been rewarding eco-friendly companies and, since this up-and-comer is trading for only about $0.75 a share. Socially responsible stocks have rewarded investors big time, in many ways, and trade at very high multiples. For example, both Whole Foods (NASDAQ: WFMI) and Wild Oats (NASDAQ: OATS) are trading at a P/E ratio of about 45.
When? The technology, markets, society and industry appear to be ready for broader bio adoption and we believe that IBTY has progressed according to plans, which means it’s going in to production and sales phase and we are due for significant news. The kind of news that shoots these small companies into the Stratosphere and when Wall Street finds this it should hit new record highs.
The Biochemistry market is one of the most promising growth areas and this new high-tech company has long-term licenses, patents, intellectual and proprietary knowledge that enables the biological production of chemicals at appreciably lower costs and with substantially reduced environmental impact. IBTY’s technologies have the ability to biologically produce approximately 40,000 commercially available chemical compounds for use in the pharmaceuticals, bio-energy, agricultural, biopesticides, fine chemicals, flavors and fragrances, cosmeceuticals, biomaterials and biopolymer industries.
IBTY’s malleable growth platform business model makes it attractive, especially because over 10% of all chemical sales will be impacted by biotech by 2010. In other words, IBTY will affect several huge markets. IBTY’s platform is sustainable and cost effective
I believe this stock could be one of the few Homeruns you get a chance to hit this year, IBTY is a great opportunity at these levels, and is at least 5 times undervalued right now. When you read all of the information in this report you will see the genius of the company’s plan, and will want to own a part of it for yourself.
We’re not alone. Keep in mind that the Rudd Report placed a $6.00 price target buy recommendation on this socially responsible, soon to be, Wall St darling. However, we feel the target is way too low considering the recent, across the board, increase in commodity prices.
There are others, as well. According to McKinsey & Co, biotechnology is ready for take-off and will be one of the key innovation drivers over the next ten (10) years in chemicals. Their reports valuate fine chemical production as the leader in growth with 30-60% penetration. Polymers and bulk chemicals will form between 6-12% of market share. They estimate that industrial biotechnology will be a $160 billion portion of the chemical industry by 2010, representing a 20% market share.
Now you may be wondering, ‘just who is McKinsey & Co?’
McKinsey & Co is the professional services firm behind the most successful companies, its global partnerships include three of the world's five largest companies and most of the top 20 global pharmaceutical manufacturers, a market that saw its consultants complete more than 3,000 pharmaceutical and medical products engagements around the world in the past 20 years.
McKinsey’s global partnerships include two-thirds of the Fortune 1000, so it’s safe to say they understand success. McKinsey is by far the largest consultancy in chemicals and was ranked #1 by executives in a recent European survey.
Everybody wants to save the world
You don’t need to put on an orange jump suit and dodge oncoming traffic to make a difference but, we know we have to do something because the alarm bells, from global warming to peak oil, have been sounded. The problem with much of the environmental movement is that it’s been framed in a circular debate, a paradigm fashioned to never reach a conclusion and even incomplete science.
What we’re talking about is different, because the effects of toxic chemicals are direct and undisputed. Yet IBTY’s brain trust has developed a suit of solutions, environmental and economic, that resolve a wide array of problems. IBTY is the best of both worlds, you can profit by doing the socially responsible thing.
“Nearly one out of every ten dollars under professional management in the United States today—9.4 percent of the $24.4 trillion in total assets under management tracked in Nelson Information’s Directory of Investment Managers—is involved in socially responsible investing.” Social Investment Forum- 2005 Report on Socially Responsible Investing (SRI) Trends in the United States.
The Social Investment Forum released its fifth biennial report on investment trends. SRI investment assets have grown four percent faster in the USA, over 258% since the first report in 1995, than all other managed assets. During this period SRI assets ballooned to $2.29 trillion in 2005, up from $639 billion in 1995. Considering that the Social Investment Forum determines the inclusion of companies’ SRI based on issues including, “beneficial products and services, energy use, pollution prevention, recycling, hazardous waste, regulatory problems, ozone depleting or agricultural chemicals, substantial emissions, climate change, or environmental management systems,” it would seam like IBTY will be the “must have” stock for any investor in this realm.
No matter how you slice it, Socially Responsible Biotech is going to the moon. Industrial Biotechnology’s (IBTY) investors will be the market’s astronauts.
IBTY is a fantastic find at this time and level, especially considering that Biotech companies’ share price often quickly spikes on the slightest news.
Unlike so many other Micro-caps, Industrial Biotechnology’s business model is not predicated on a bunch of long shots coming together and only if the planets align just right. In fact, the timing couldn’t be better as IBTY should be in production and selling biologically created chemicals by the end of this year. Since you are hearing about it when the stock is below its historical average, before the big production and sales news releases, you are getting in at a lower risk entry point and time.
Industrial Biotechnology is projecting that it will be profitable in 2007, with a net income before taxes of $5.2 million. That divided by its seventy million shares outstanding would represent earnings of approximately 7 cents per share. It’s likely that Industrial Biotechnology will trade closer to a multiple of its projected 2008 earnings, which is about $57.6 million or about 86 cents per share.
So using a conservative multiple of 10 you have a price of $8.60 per share, but this will probably trade with its SRI value in mind, so if we use a multiple of 45 this then could become a $38.70 stock and your ticket to the stock investor’s hall of fame. In any case, you can see why it’s imperative to get in at this level
Industrial Biotechnology has already identified 6 chemical compounds for biological production that it will begin to produce and its projected cost to manufacture advantage compared to market is between 50-96%. For example, valencene, the substrate for nootkatone production, costs over $200/lb and can potentially be produced using the FPP technology platform using glucose, which runs less than $1/lb as raw material.
Through agreements and vehicles already in place, like licensing, partnerships, and direct sales via multiple distribution channels, Industrial Biotechnology brings to market new and established chemicals that are in high demand for use in flavors and fragrances, fine chemicals, pharmaceutical, agricultural, environmental, bio-energy, cosmeceuticals, agricultural, bio-pesticides, biomaterials and biopolymer industries.
Industrial Biotechnology’s technologies have an immediate commercial application and revenue generation capability in the worldwide chemical market estimated to be at $1.7 Trillion in sales.
Recently, an industry analyst and news source, The Natural Foods Merchandiser, estimated the natural products industry to be in the $44.5 billion range. Furthermore, they expected compound annual growth rate to be in the 10 percent range over the next five years. The fact that many of these issues have become media driven has expanded the traditional customer base beyond the historical core customer and is a sure signal that the movement has hit critical mass.
If Industrial Biotechnology is bought out by a Giant Chemical Company early IBTY shareholders could become millionaires…Overnight
Industrial Biotechnology’s pioneering and state-of-the-art biological production methods can replace large manufacturing facilities, many of which employ hazardous processes and toxic materials in their chemical production. For example, the Cytochrome P-450 in vivo oxidation process, for chemical compound production, takes place in large vats and eliminates toxic components, extreme heat or caustic agents.
These innovative methods involve fewer production steps, and through the use of Cytochrome P450 “designer” enzymes and ALCHEMx’ proprietary production systems, to enable the company and its partners to biologically produce over 40,000 commercially available compounds.
IBTY’s genetically engineered yeast will also help relieve the pressure on some plants and trees where the quantity available is limited, impure and very costly manufacture.
Competition is unlikely to be a problem in the foreseeable future because high barriers to entry protect Industrial Biotechnology’s technology. These barriers include the complexity of the science, lengthy research time frames, substantial costs, and patent protections.
The company is also expanding their service offerings to include biotechnology infrastructure solutions for companies looking to incorporate or expand on technologies in the emerging fields of biologically produced chemicals.
Another reason to invest in products which are able to biodegrade quickly and completely will be the avoidance of further environmental impact. The toxic cleanup costs for petroleum-based products and other toxins may eventually force the traditional products off the market and could eventually cause the manufacturers to close down to avoid potential lawsuits.
Product biodegradability in the future may not be an option, considering sustainability issues, in other words keeping the earth inhabitable. We are just beginning to understand biodegradation and the delicate balance of interactions among all of earth's organisms.
The Leadership Team is headed by Andy Badolato, Chief Executive Officer, while the Scientific Team includes the world renowned Luet Wong, Ph.D., Seiichi Matsuda, Ph.D., Mark Truei, Ph.D., Kung-Ta Lee, Ph.D., Yuan-Chi Su, Ph.D., K. Jim Jen, Ph.D., Stephen Bell, Ph.D., Gregg Henderson and Gurinder Shahi, Ph.D. After you perform your due-diligence I’m sure you will be most impressed with this group, but rather then go into lengthy details about their extraordinary credentials, or numerous awards and published works, I prefer to elaborate on their IBTY related performance.
This is a group that is dedicated to maximizing shareholder value. For example, when IBTY entered into a strong strategic partner (biological manufacturers and process development/scale-up partners) financing agreement and then had members of its management turn in 17,500,000 shares of common stock to the treasury of the Company. This is almost unheard of, a start-up company pulling off this type of move to add tons of shareholder value, and is proof of the Team’s confidence in its future.
IBTY has 70 million shares outstanding and very little debt
The Team has also produced on the scientific development side. The ALCHEMx Production Platforms™ is the technological harmonization of Enzyme Engineering, Metabolic Engineering, Molecular Engineering, Fermentation, Biotransformation and Product Recovery. The end result is a commercial manufacturing process, ideal for scaling up to large commercial production levels with improved efficiencies and cost advantages. IBTY will replace the large chemical manufacturing facilities, many of which employ hazardous processes and toxic materials in their chemical production.
Industrial Biotechnology controls the Oxford Cytochrome P450 Designer Enzyme Technology Platform, developed by IBTY Scientific Advisory Board member Dr Wong. Cytochrome P450 is capable of transforming a chemical substrate into a highly valuable chemical, in most cases, in a single step and at a fraction of the cost of what is being produced by traditional methods.
The Rice FPP Biosynthesis Technology Platform, developed by IBTY Scientific Advisory Board member Professor Matsuda, is a process that turns cells into “cell factories” that produce a wide range of fine chemicals, which are in heavy demand in the international commercial and industrial marketplace. IBTY will utilize designer enzymes to transform low cost hydrocarbon molecules such as glucose, galactose and methanol into high value products, at unheard of price efficiencies and significantly reduce the environmental impact.
The space IBTY operates in was unimaginable just a few years ago, but the need/demand for its products is greater then ever and considering the company’s market capitalization should grow from about $50 million to over $500 million, in just a few years, Industrial Biotechnology should have the legs to get you there.
Trade it for the Short Term and/or Accumulate for the Long-Term, IBTY is poised for a launch. The share price reduction combined with the ever-increasing need for Industrial Biotechnology’s break-through solutions presents a unique investment opportunity, but remember once the plane takes off, it’s gone
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