Bioventix gets City excited

A maiden set of results since listing on AIM smashed forecasts and helped small-cap pharma company Bioventix (BVXP) shares surge as much as 15%, and back above its float price for the first time since May.

The company, which develops monoclonal antibodies for use in immunodiagnostics, grew revenue by a third to £3.5 million. Strip out one-off costs associated with the flotation, staff share option costs and back-dated royalties, and pre-tax profit rose by 22% to £2.2 million.

After Bioventix "comfortably" beat finnCap's forecasts, the broker has upgraded its sales forecast for 2015 by 16% to £3.7 million and pre-tax profit estimate by 19% to £2.6 million, giving earnings per share of 43.1p.

By developing sheep monoclonal antibodies (SMA) to improve pharmaceutical testing, Bioventix works in the areas of clinical diagnostics and drugs of abuse testing.

Its vitamin D research has been progressing well, especially with the vitD3.5H10 antibody. Revenue from this avenue is steady with 13 licences in place and the company is sure that this will continue to grow over the next year.

The firm is good with its cash, too. Despite increasing dividends throughout the year, Bioventix's net cash balance at the end of June stood at £3.4 million. A nice pile of cash provides the opportunity for acquisitions, returning money to shareholders and/or strategy growth.

Currently, Bioventix is developing the androstenedione, TSH, T4 and estriol antibodies. BNP, p24 and PTH should be added to its portfolio next year. The pharmaceutical company has also started to look at infectious diseases.

And it's not just different scientific avenues the company is venturing into.

"We remain cautiously optimistic about growth prospects in China," it said in a statement. "There are rapidly emerging Chinese customers and this represents a growth opportunity. Business development in China does present challenges but we expect that the quality of our antibodies will help the company meet its objectives."

At 650p, and on finnCap's 2015 estimates, the shares trade on 15 times forward earnings. Strip out net cash worth 68p per share and that multiple drops to 13.5. Peer Consort Medical trades on a forward price/earnings (P/E) multiple of over 23 times, GlaxoSmithKline nearly 15, and Abcam 21.

Raising its target price to 750p, finnCap reckons the risk is to the upside.

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