Small Cap Value Report (Fri 29 Mar 2019) - BVXP

Friday, Mar 29 2019 by

Good morning, it's Paul here.

I'm struggling to get to grips with the RNS, due to an amusing viral video having caught my attention. It's the Speaker of the House of Commons saying, "Mr Peter Bone", set to Beethoven's 5th. So if so-called Brexit is driving you around the bend as much as it is for me, then this might provide some light relief (it is very funny!)

As a further distraction, there's a tramp wandering around my neighbourhood this morning, looking like a dishevelled Father Christmas, repeatedly shouting at the top of his voice, "I've had enough!". I know exactly how he feels, small caps are really rubbish at the moment.

On to today's news.

Bioventix (LON:BVXP)

Share price: 3600p (pre-market open)
No. shares: 5.14m
Market cap: £185m

Half year report

Bioventix plc (BVXP) (“Bioventix” or “the Company”), a UK company specialising in the development and commercial supply of high-affinity monoclonal antibodies for applications in clinical diagnostics, announces its unaudited interim financial results for the six-month period ended 31 December 2018.

This tiny company has extraordinarily high profit margins.

Headline figures look good;

* Normalised* revenue up 24% to £4.4 million (2017: £3.5m)
* Normalised* profit before tax up 24% to £3.2 million (2017: £2.6m)
* Closing cash balances of £5.5 million (2017: £5.6m)
* First interim dividend up 20% to 30p per share (2017: 25p) 

Outlook - sounds positive too;

We are delighted to be able to report such positive news for the current half-year.  We are pleased with the continued success of our vitamin D antibody and the remainder of the core antibody business.  We remain optimistic about our troponin revenues and the success of these high sensitivity troponin products around the world and we look forward to further progress in the second half of the year.

I don't see any mention of performance versus market expectations.

My opinion - none really. I know the bull case pretty well, having met the company several times over the last few years. To my mind, the £185m valuation is now so large, that you really have to understand the products & markets very well indeed, and be super-confident that amazingly high profit margins are sustainable.

The company has a brilliant track record;

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Bioventix PLC is a United Kingdom-based biotechnology company. The principal activity of the Company is the development and supply of antibodies. The Company specializes in the development of sheep monoclonal antibodies (SMAs) for use in immunodiagnostics focusing on the areas of clinical diagnostics and drugs of abuse testing. The Company's non-vitamin D business consists of antibodies, NT proBNP (heart failure), testosterone, Free Triiodothyronine (FT3) (thyroid hormone), estradiol, and various drugs, such as tetrahydrocannabinol (THC)/cannabis, and progesterone. The Company offers products for indications, such as thyroid, fertility, oncology, cardiac, vitamin D, drug of abuse, infectious disease and miscellaneous. Its sheep hybridoma technology produces cell lines that secrete SMAs. The Company offers a panel of SMAs to 25-OH D and has various 25-OH D2 and 25-OH D3 specific antibodies. It sells its products through direct sales and through distributors. more »

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35 Comments on this Article show/hide all

johnsmith68 29th Mar 16 of 35

Paul, I'd really appreciate your thoughts on the fallen knife that is Fireangel Safety Technology (LON:FA.) Their ticker seems all to apt now as a fair description of what's left of my initial investment in this accident prone fire detection company. They do appear genuinely to be turning a corner but with today's placing and final results (not pretty), I really would love to hear what you make of this as a turnaround opportunity. Is it time to re-enter the burning building or are the alarm bells still ringing? Thanks.

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JakNife 29th Mar 17 of 35

Are Stockopedia going to the UKIS tomorrow? The booklet that they printers last year was enormously useful!

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timarr 29th Mar 18 of 35

In reply to post #463818

On the other hand pricing pressure in the medical testing equipment market should be temporary.

I guess the important question is why do you think this? If it's a growth market then it'll attract participants, and the price will go down.

The bigger concern, if people believe that Vitamin D testing is critical to the future of Bioventix (LON:BVXP) is whether the medical profession thinks it's worth testing for. The original boost in this area came from a study that suggested Vitamin D protected against cancer. However, a study by many of the same researchers in 2017 concluded that was a false positive:

And on heart disease a similar finding:

The NHS has now advised GPs that vitamins shouldn't be prescribed because of low clinical effectiveness.

Whether this will lead to a reduction in testing for Vitamin D is hard to know, its health benefits seem to have attained mythical status. However, the medical profession appears to be moving against testing in general.


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Trident 29th Mar 19 of 35

In reply to post #463843

I suspect the UKIS as a previous Tom Winnifrith vehicle (don't know if he still features and presents) is not a Stocko venue for this year? I believe this investor show vehicle was acquired by Nigel Wray however, so maybe less affected by certain stylistic tropes associated with TW.

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Howard Adams 29th Mar 20 of 35


Any Somero Enterprises Inc (LON:SOM) holders might be interested in this update from IC today.

Yesterday afternoon, Somero Enterprises (SOM) announced that it had been advised by chief executive Jack Cooney of his intention to sell around 800,000 shares at 340p each, representing around 1.42 per cent of Somero’s voting rights, and totalling £2.7m. Following this share sale, Mr Cooney has agreed not to dispose of any of his remaining shareholding for at least 24 months. Later in the day, we learnt that Mr Cooney’s offloaded ‘placing shares’ had been sold to institutional investors. Somero’s shares dipped in afternoon trading. They are up by around 2 per cent this morning. Buy.

(I held it in the past)


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LovelyLovelyGorgeous 29th Mar 21 of 35

Can I just mention that I am really cross about GAN (LON:GAN). We have had a regular flow of positive RNS news about contract wins and data to say what a wonderful opportunity there was with the US sports betting market opening up.

Today's results give us a bigger loss than last year and the company puts itself up for sale. Clearly the directors have no clue how to monetise their software and are happy to give away the company. There is a conference call at 4pm which I would like to be on but cannot do so due to having to work.

I suspect that the parties that took part in the recent placing will not be very happy either.

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mw8156 29th Mar 22 of 35

In reply to post #463848

vitamin D testing mainly done for a component of osteoporosis assessment, in ethnic minorities and/or in those on vegan-style diets not getting much VitD through sun exposure or diet, those on steroid therapy and in malabsorption and other intestinal problems such as coeliac disease and Crohn's as well perhaps having a role in assessing pathogenesis of autoimmunity and autoimmune individuals; as the population ages, can see osteoporosis becoming more of a problem especially in post menopausal women with sedentary lifestyles...

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purpleski 29th Mar 23 of 35

Hi Paul

I saw the Peter Bone video last night at midnight and I hold Bioventix (LON:BVXP) so it has been a good morning for me.

By the way I have to thank you for Bioventix (LON:BVXP), as I was put on to it in your conversation with Leon Boros on 9th October 2015  where you discussed Bioventix.  I bought a small 5% of the total investment I have now on the 15th October. So thank you.

interview is at

Going to listen again. I think Leon Boros still has a declareable position in Bioventix (LON:BVXP).

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purpleski 29th Mar 24 of 35

In reply to post #463878

Interesting and I should have known this as I consider myself a healthy vegan, though hopefully I have enough Vit D as I run or ski most days but may have to take a test.

I think that there is a lot of concern that the general population (vegan of otherwise) is severely Vit D deficient, in large part I think because of lifestyle (existing indoors all the time), and the possible long term health consequences to the general population.

I found this at

According to a 2011 study, 41.6% of adults in the US are deficient. This number goes up to 69.2% in Hispanics and 82.1% in African-Americans (3).

Therefore there is a real need for testing and hence, I suspect the bullishness around Bioventix (LON:BVXP).

I hold Bioventix (LON:BVXP) at 21% of my portfolio.

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timarr 29th Mar 25 of 35

In reply to post #463898

I think that there is a lot of concern that the general population (vegan of otherwise) is severely Vit D deficient, in large part I think because of lifestyle (existing indoors all the time), and the possible long term health consequences to the general population. 

Look, Bioventix (LON:BVXP) is a very fine company and Peter Harrison a damn fine CEO. There's a huge amount to like.

But at this valuation you've got to make sure that the valuation is properly underpinned. Holders need to look for reasons to sell, not to hold or buy. If despite the best bear case the investment still stacks up then fine. As Charlie Munger says, always look for the evidence to disconfirm your theory, not to confirm it.

A lot of Vitamin D testing has no medical reason for it - up to 50% possibly. And even where there is a suspicion of an issue most people would be better off just going for a regular walk or taking a preventative supplement rather than forking out £50 for a test.

Choosing Wisely, which campaigns to reduce unnecessary medical interventions has this to say:

Many people have low levels of vitamin D, but few have seriously low levels. Most of us don’t need a vitamin D test. We just need to make simple changes so we get enough vitamin D. We need to get a little more sun and follow the other advice on the next page.

Even if you are at risk for other diseases, like diabetes and heart disease, a vitamin D test isn’t usually helpful. The test results are unlikely to change the advice from your health care provider. It is much more important for you to make lifestyle changes first—to stop smoking, aim for a healthy weight and be physically active. And, like most other Canadians, you should try to get enough vitamin D from sun and foods. And talk to your doctor about supplements

Anyway, on that note, I'm off to top up my Vitamin D by taking a stroll in the sun.


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purpleski 29th Mar 26 of 35

Thanks Tim. Food for thought and enjoy the stroll in the sun.

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Graham Ford 29th Mar 27 of 35

It is worth understanding that at UK latitude the sun is only strong enough to create vitamin D in your exposed skin during roughly late spring to early autumn months. So, Timarr, good going for a walk today but don’t expect it to do anything significant for your vitamin D unless you are planning on exposing a lot of skin!

The other substantial issue is that people are slapping on high factor sunscreen much more often to protect against skin cancer. That’s good but what they don’t tell you is that it will reduce the amount of vitamin D that is created by the sun on your skin.

So if one has any trouble absorbing vitamin D from the diet it can be difficult to get enough. So, a screening programme for Vit D deficiency testing should be in place for those with digestive issues such as IBD in my view.

No idea what that means for Bioventix though!

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sharmvr 29th Mar 28 of 35

In reply to post #463928

Pretty dry call at work, so going to offer my tuppence, even though it is not worth tuppence, but lack of vitamin D, I consider well and truly in the universe of 1st world problems.

My wife takes about 8 pills (after gym and breakfast), for all these deficiencies.
My family (a few doctors around) explained to her, that with a healthy diet and no actual medical conditions, those pills are pretty much some very expensive urine.

As far Bioventix (LON:BVXP) is concerned, personally I concur with Paul - to initiate a position, valuation is high and its probably for those who understand the competitive moats that anti-bodies create.

Great weekend guys - hope to see many of you tomorrow (if I can make it) or at Stockslam next week.


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fifthcolumn 29th Mar 29 of 35

In reply to post #463863

Hi Howard, thank you for posting this. I still hold Somero. What do you feel is the reason for the sale? Just a personal need for some cash or something more intriguing?


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rmillaree 29th Mar 30 of 35

Somero Enterprises Inc (LON:SOM)


Hi Howard, thank you for posting this. I still hold Somero. What do you feel is the reason for the sale? Just a personal need for some cash or something more intriguing?

Hello fithcolumn - if you look back at yesterdays discussions there are comments in that regard - basically Jack is 72 and a bit now so seems sensible for him to be selling down his stake somewhat.

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peterg 29th Mar 31 of 35

In reply to post #463863

Howard, the original RNS is probably more useful than the IC edited version!

It includes the important explanation:
The US tax legislation obliges Mr. Cooney to make withdrawals from his current pension plans during 2019, the assets of which consist solely of Somero shares.

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Bonitabeach 29th Mar 32 of 35

Bioventix (LON:BVXP) looks a high risk gamble. I am sure there is money to be made but probably only for those who paid less than today's price.

The company reminds me of Immunodiagnostic Systems LON:IDH which had a similar profile a few years ago, until ROCHE HOLDING AG  stomped all over them.

No position.

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gsbmba99 29th Mar 33 of 35

In reply to post #463818

If you have an interest in following the fortunes of VitD testing, I would suggest reading the quarterly results transcripts from DiaSorin (DIA in Milan) who normally comment on VitD because they have unusually high exposure to it (relative to people like Roche who are far more diversified). They have a more limited number of assays and appear to have been the first in the US. DiaSorin have been experiencing mid single digit revenue declines on VitD in the US for about 12 months. It appears to have been driven by the decision of a large insurance company not to reimburse for VitD tests done for "screening" purposes (whatever that means). This seems to have impacted (almost exclusively) one of the two dominant off-site testing companies (LabCorp or Quest). If you go back in time on the transcripts, they say they have seen similar issues in France and Australia that eventually resolved themselves with volumes picking back up.

I would be reluctant to read much, if anything, into the DiaSorin VitD experience to draw conclusions as it relates to Bioventix. The Bioventix (LON:BVXP) VitD antibody is almost universally used (as with testosterone) but is still gaining new customers (eg Diazyme who, I believe, received US approval in Jan '18).

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Golspie 30th Mar 34 of 35


What's your view of PAY? High yield and in my long term has been good for me, but the barriers to entry appear low.

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WDWombat 31st Mar 35 of 35

ROCE % 43.0 42.1 46.9 51.1 56.3 61.9 Bioventix
ROCE % 11.3 8.7 3.6 -66.0 2.7 1.6 Immudisaster

I do not understand the above comments comparing these two

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »


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