Value Microcaps Motherboard

[Knowledge is King]

Just listened to the NZYM CC...


Overall, I think you're right that the December quarter will probably be weak for them. In fact, a caller flat out asked them as much and management tried to say that "this could happen or that could happen" to make it a successful quarter...but to my ear it sounded like he was resigned to a weaker quarter.


Nonetheless, I'm going to support the stock around a buck because I like the long-term risk/reward here. The primary attraction is what NZYM calls its "franchise business"--supplying product to big pharma as they research treatments for Hepatitis C. NZYM produces a key raw material of such treatments and supplies several companies that have treatments in Phase 2 trials. Needless to say, a move to Phase 3 and/or FDA approval would be a nice boost to NZYM business. The "franchise business" revenues are apparently very lumpy and, in fact, were negligible in the September (Q3) quarter versus $3.2M in the June (Q2) quarter. Management attributed some of the Q2 decline to seasonal slowness in Europe as they take their nanny-state summer vacations.

Management also detailed cost-cutting measures that they've implemented which have helped margins. Employment is down from 79 to 61 year-over-year, natural gas expenses have been slashed, cheaper raw materials have been sourced, and the company has cut down on waste. Also, management seemed to indicate that the falling dollar is beneficial to their competitive position vis-a-vis their European and Far East competitors.

Finally, management directed listeners to the website HCVdrugs.com to see all the Hepatitis-related drugs trials/programs that are in progress...very impressive and suggestive of some very large opportunities for little NZYM.