Monday, 29 November 2010

Neptune Attracts Dundee Analyst Coverage

Neptune Technologies & Bioresources
Basic Shares: 40.2 million
Fully diluted: 43.1 million


Dundee Securities Corp. very recently released its first research report on Neptune Technologies labelling Neptune stock as a "Buy" (Speculative Risk - no price target) and calling for major milestones from all of its big brother partners.

We can't post the report but we will provide insight into the document.

The report by analysts David Martin and James Kuo had the tongue-in-cheek title of, "Hey - What' You Lookin' at Shrimp," a play on the fact that Neptune products are all formulated from omega 3 oils extracted from Antarctic krill - a tiny member of the shrimp family.

That minimalist humour aside, the report detailed upcoming milestones such as the estimated $3-$4 million, 508-patient, phase two clinical trials Neptune subsidiary, Acasti Pharma, is hoping to begin early in 2011.

That will hopefully coincide with clinical results from commercial partners Nestle and Yoplait in early 2011 and the full launch of Bayer's Arctic Wonder krill oil capsules that is expected in February 2011.

While on Acasti, the Dundee analysts labelled the planned spin off of Acasti as a public company on the Toronto Stock Exchange Venture as another near-term milestone that would enhance Neptune's value.

And looking in the rear-view mirror, the Dundee report, noted Neptune built a solid, profitable business model which stands it in good stead to catch the wave of baby boomers who are increasingly looking to natural products like krill oil to reduce their bad cholesterol and triglycerides while increasing good cholesterol ratings.

The report also discusses the growing revenues from the dietary supplement core business. As yet another plant expansion has been completed, Dundee is looking for revenues to rise to $29 million with $8 million in EBITDA.

The report also highlighted how Neptune's strong commercial partners plus its advisers and consultants such as cardiologists, Dr. Steven Nissen and Daniel Rader, were major pluses in the company's evaluation.

The report comments that "While still early in the Rx game, Neptune continues to build validation supporting that krill sourced omega-3 fatty acids may have superior benefits compared to the currently marketed leader in the field (Lovaza) and a late stage competitor (AMR101)." That exact subject has been the foux of several releases as of late with Acasti signalling its positive animal study results versus Lovaza. To read today's (Nov. 29th) news release, click here.
On the subject of valuation, the report notes a $4.15 / share value if CaPre's Phase 2 results are positive and that would drive Acasti's value to $200 million to add to NTB's inherent value based on its core business.