Biovica Turns Bullish, Hofseth Biocare Award, Short Term Trades

Biovica idea has been delayed by FDA Covid related congestion. Biovica announced last night, that FDA process has restarted. Biovica is covered by Pareto and Redeye. Both are very bullish.

Last year we have doubled our money on Xbrane. I believe this is a doubling candidate too. Both brokers are equally bullish. I include below parts of their notes published today:

Pareto Securities:

FDA feedback: Re-submission in May, expected approval in June
Biovica received the full feedback from the FDA tonight – after months of discussions with the authority. Biovica will re-submit the application by May upon which the FDA will approve or reject within 30 days i.e. within June (given the FDA sticking to its timelines and not e.g. be overwhelmed by a resurgence of COVID-19). This announcement finally gives clarity on timelines and while the delay is extended into June, considering the extensive FDA discussions laying behind, we believe that DiviTum has a high chance of approval.

We have a Buy rating on BIOVIC with a TP of SEK 103.  

Finally, a clear timeline
The company has to re-submit the 510(k)-application with some additional data from a “lab study” which Biovica will generate over the coming weeks. The study is to provide proof that Biovica can produce several lots of DiviTum materials withing set specifications – which the company has done in the past, yet the FDA asked for additional validation.

Cash position sufficient until expected DiviTum approval in June
Biovica had cash and cash equivalents of SEK 118m at the end of October 2021. With a quarterly burn rate of approximately SEK 14-16m, the cash position should suffice until approval. Upon approval, the burn rate is expected to increase substantially due to sales and marketing costs, for which the company is likely to require additional capital.

What is DiviTum?
As a reminder, DiviTum is a novel blood-based diagnostic tool that allows to see within 15 days if a CDK4/6 inhibitor used in metastatic breast cancer such as Pfizer’s Ibrance is having an effect on the tumor or not. Current imaging methods such as MRIs require three to six months. The company managed to gather extensive amounts of clinical trial data and support from high-profile key opinion leaders (KOLs) within (mainly) the area of metastatic breast cancer.

Redeye Research

Redeye Research basic package is free of charge, recommend subscribing:

Biovica: The message from FDA is – Ready for boarding

FDA is now ready to process an updated application for Biovica. Earlier, the interactive process between FDA and Biovica was paused, and this is now history. There is one remaining outstanding question, and Biovica expects to be prepared to file in May. We can expect 60 days to an FDA approval or a complementary clarifying question in the worst case.

Biovica’s US commercial process moves from paused to active. FDA has activated the interactive process by sending a formal clarification regarding the one outstanding question and what is required from Biovica to file an updated application ahead of a final decision.

We understand that the remaining question is related to methods, and to address this question, Biovica probably needs to complement a precision study. The last question does not require a new clinical study, and Biovica expects the updated application to be filed in May, after which FDA is expected to decide within 60 days.

This progress is, of course, very positive news. The FDA is moving into a more normal business in the diagnostic space outside COVID related emergency applications (Dx has been pinpointed by the FDA earlier as an area that COVID related priorities have especially hit). The positive is balanced by a slightly longer than expected time from this FDA decision to the actual filing from our perspective. This period is now approximately three months, and we expected more like one to two months. This delay is, in our view, small beer in the overall picture.

Our outlook and value proposition

FDA is ready for boarding, and we can expect take-off by July in our view. This renewed active stage is positive, and it is also reassuring that the final stage will not require new clinical studies. The opposite would have been negative and surprising as Biovica is supported by an extensive and growing body of clinical support. We remain confident that the delayed FDA process will result in delayed approval. Our value proposition is a base case value of SEK 95 (Bull SEK 325, Bear SEK 20).

Hofseth Biocare Most Innovative Human Medical Nutrition Ingredients Award

I have been long bullish on Hofseth Biocare. It is a transformation play, and transformation plays take a bit longer. It is not a short term play. The investment thesis is summarized below:

Hofseth Biocare announced today they got Most Innovative Human Medical Nutrition Ingredients Award. It is an in independent verification.

Hofseth BioCare (HBC) has been named Most Innovative Human Medical Nutrition Ingredients Producer in the ghp Technology Awards announced today.

The award recognises the 15 years’ R&D and wide-ranging applications of the company’s three ingredients: ProGo® bioactive peptides, CalGo® calcium collagen complex, and OmeGo® full spectrum omegas. With 34 clinical studies and patents completed or underway, and 48 health and structure / function claims from US FDA, Health Canada and EFSA, the scientific evidence continues to grow.

What makes HBC different is its ability to convert fresh sashimi-grade salmon byproducts alone into nutritional ingredients to support human health, using a truly circular business model with zero waste. As part of the Hofseth Group, it is the only fully integrated, sustainable (carbon-neutral by 2025) salmon business devoted to human nutrition and wellbeing.

A safe, patented enzymatic hydrolysis process is used to gently extract the ingredients from fresh salmon offcuts. Importantly, this means the ingredients are subject to minimal processing with no additives, antibiotics or GMO.

Dr. Tanja Schaffer, Executive Vice President, Global Ingredients at HBC commented: “We are delighted to be recognised as the Most Innovative Human Medical Nutrition Producer 2021 by ghp. Our products are the most sustainable and traceable marine ingredients available globally. We believe their potential is amplified through our innovative research platform, which can identify new health benefits from marine ingredients with proven commerical significance”.

Short term trading ideas:

I have been buying AkerBP in anticipation of good Q4 results due on 10/2. BP PLC announced today strong results that pushed the stock by 7%. AkerBP could be similar.

I have been buying Huddly that is reporting on 15/2. Very good company, that is 50% down on Covid supply chain disruptions. I am very bullish on Huddly, I believe the stock will come back. It could be this quarter, it could be next. The expectations are beaten down, any positive surprise could result in a material share price growth.

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The goal of the blog is to provide investment ideas for further research. I/we have a beneficial position in the shares discussed above either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. The article does not represent investment advice. Please do your own research before making any investment action.

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