BiOasisTechnologies Inc (BTI)

[craig76]

Hi myrtle222,

The direct link to the analysts report can be found here:

http://www.jrstocks.com/media/20150120_biOasis_Report_FINAL.pdf


I would read report with a grain of salt so to say. I skimmed the report and from what I have read, it seams to me that JRStocks - James Darcel has a slim to none understanding of the actual science and potential of BiOasis. In my opinion I think the value he applied to any deal or partnership BiOasis enters will be for much more than 25 million. I am scratching my head as to where he got that valuation.


I am posting a post in response to JRStocks paper on BiOasis.
This is another post form John D.


A Few Thoughts about The Jrstocks Analyst Report

I'm not "stroking out" about this analyst's report as darnit opines. He has incorrectly predicted my reaction to it. But the report is flawed to a degree, in my opinion. It was written by somebody who is, perhaps, not as fluent in the biOasis story as others are, but that's par for the course with these things. The fact is, biOasis essentially pays for the analyst's research time but does not have final say about the opinions expressed by the analyst.

If biOasis wanted control over the piece (and total responsibility for it) then they'd have the thing prepared internally, perhaps with the help of a contracted copywriter/analyst. As it is, Mr. Darcel of www.jrstocks.com assumes the responsibility for the content, with some proper limits on blue sky controlled by biOasis. Let's look at a few issues, especially license valuation numbers that have been raised.

I dealt with the $25 million question yesterday as it relates to Herceptin. Right now, there is a possibility that Roche with Herceptin or another pharma with a Herceptin biosimilar could partner with biOasis and capture the entire $7 billion per year Herceptin market. Herceptin comes off patent in the USA in 2019 and that market will be wide open for competition. The players in that market will have to struggle for market share at lower dosage prices, probably leaving the dominant player with $2 billion per year in revenue at best. The competition will drive the total revenue downward from $7 billion per year to maybe $4 billion or less and the biosimilars all have to share that market. They wouldn't be developing the biosimilars unless they thought they could make a profit under these diminished commercial market realities.

But if MTfp-TZM (Transcend/Herceptin fusion protein) works in both the brain and body, as has so far been shown, then there is reason to believe that MTfp-TZM (or an MTfp-TZM biosimilar) could become the Standard of Care for HER2+ breast cancer, capturing almost the entire market of $7 billion in annual sales. Even more important is the profit margin for the owner of MTfp-TZM. If a bunch of biosimilars can come on the market and share a reduced Herceptin market (of, say, $4 billion, down from $7 billion), and if they can make a profit on their portions of it, then imagine the profit they can make if they have the entire market to themselves! That potential market would pop back up to $7 billion per year, or more when you add in sufferers of HER2+ brain tumours that are currently untreated.

As I remarked yesterday, $7 billion per year is almost $20 million per day. It actually works out to $800,000 per hour. Mr. Darcel writes the following:

"...biOasis could receive as much as CAD$25 million for each major long-term license agreement with the fees staged by successful steps during the processes of regulatory filing/reporting and R&D milestones to be determined. These fees would be eventually augmented by a royalty stream from product sales."

That means, intentionally or not, that Mr. Darcel is saying that an MTfp-TZM license could be purchased from biOasis for $25 million or the equivalent of 31.25 hours of future sales (plus future royalties). I am somewhat agog at the statement! I don't think that makes sense. I can see it for therapy with a few hundred million in potential revenue, but take a look at MedImmune. If MedImmune's work with biOasis included pain therapy, a market estimated at a potential $30 billion in annual sales, is Mr. Darcel saying that MedImmune could get the key to those sales from biOasis for a mere $25 million? There is no sense of proportion in Mr. Darcel's "analysis." (It should be noted that we still have no idea which of MedImmune's preclinical programs were tested with The Transcend Platform, or whether a pain therapeutic can be made to work, even if Transcend successfully transported the drug into the brain.)

Further, he says that, "biOasis has no revenues currently, and we do not anticipate any revenues for some years to come." Has he totally ignored the three biOasis business models? biOasis has the vector, the key that allows the pharmaceutical companies to proceed with their neurotherapeutics. If the Transcend Platform works as hoped, it is preposterous in the extreme to think that biOasis does not have the leverage to charge significant fees for licenses that would allow the pharmaceutical companies to move forward with research, clinical trials and commercialization of their many neurotherapeutic candidates. They can't move ahead without biOasis or a similar competitor (which so far as we can tell, doesn't really exist yet). There will be no waiting for years for revenue here, unless there is something basically wrong with the Transcend Platform. biOasis is transporting the drugs and the company's future revenue should not entirely depend on the success or failure of somebody else's therapeutics. The biOasis partner would otherwise not be able to advance its therapeutic without biOasis and that has value to biOasis. As I've said many times, eventually the pharmas will not be testing Transcend. Instead, they'll be using Transcend to test their own therapeutics.

Mr. Darcel is wrong about something else, but it's not his fault, not really. I can tell you from first hand knowledge that when biOasis decided on the "MTfp-AAA" nomenclature, that the names were preceded by "f" as in, "fMTfp-AAA" with the "f" meaning fusion protein. This was the nomenclature used in the September 9, 2014 "Sandhoff" press release. But it was quickly determined that because all significant work in the future would be with fusion proteins, then there was no need for the fusion designation. biOasis immediately dropped the "fMTfp" and "fMTf" names and shortened them to "MTfp" and "MTf" (for, respectively, "Melanotransferrin peptide" and "Melanotransferring") and the new names were used on the September 18, 2014 "Scarpa" press release. The new nomenclature remains in use on official documentation. But Mr. Darcel uses the "fMTfp-HEXB" name in his report. It's a fair and honest mistake because that's the name on the press release of September 9th, and I don't fault Mr. Darcel for it.

The point is that if a scrupulous reading and editing of Mr. Darcel's report had been performed by biOasis then the "fMTfp" designation would likely have been caught. As a copywriter, my clients, including biOasis, are responsible for the content and publishing of the material that I have a hand in creating. Not so with an analyst's report like this, although the company needs to make sure that there are no outlandish share price or revenue projections that could be challenged by the exchange. Otherwise, the opinions of the report remain those of the analyst, without interference from the company.

Mr. Darcel's report reached the screens of a mostly new audience for biOasis and that is the purpose of supporting it in the first place. I think readers here should just back off a bit on this. There is no pumping of the stock in the report, just an analyst's "best effort" analysis and he gets it mostly right (in our opinions), but with very conservative estimates of future share price and revenue, as is right and proper for him to do given the company's participation in its creation, however minimal the participation was.

In the end, I'm glad that it went out. The story needs to be introduced to new investors. My understanding is that it was pure coincidence that the James West and jrstocks reports came out on the same day. Except for the audience here on Stockhouse, the two reports went mostly to different subscribers, and that is a good thing.

And about the higher share price and revenue projections that we find here on Stockhouse, they also are mostly well-considered opinions, but they are still just opinions, all from people like myself who have a vested interest in achieving those numbers. Further, we can and do pick apart the fundamentals for intrinsic value, but we are also players in a stock market that we understand to greater and lessor degrees. When we see plays like Synageva and its market cap of around $4 billion, with its limited pipeline, then surely we can legitimately project that the investing public could also drive the biOasis share price to very high levels, given that biOasis may have the key that is necessary to open up potential annual commercial markets of $100 billion to $200 billion in neurotherapeutic sales.

So lets just keep it all in perspective and appreciate that the biOasis story reached lots of new investors this week. Far from "stroking out" about it, I'm pleased.