Bioprogress is a stock I have been in and out of quite a few times since it floated in May but not much mention here on the Investors' Room. Does anyone else follow this stock. I see it is up 1.5p today and a few good buyers seem to have appeared.

Here's a tip Aqafresh, Interalliance Group IAL, they're gonna be taken over soon by a company call Birkely Berry Birch BBB and the IAL stock is going to rise big time.

i thought bbb had gone bust, they were on watchdog type programme just the other week.....defintely dyor research on this one

been away for a week and can't believe so few posts on BPRG - can someone please let me know if the broker's note has come out while I was away??? Would be much appreciated

No not out yet,maybe next week!!!!

Thanks nematode - it actually MUST come out on Monday, Tuesday or Wednesday next week as I spoke to Graham Hind and was told that it would be out by the end of March

Take the example of Gresham computing that went from 20p to 4.54 in 6 months! I feel BPRG potential and exposure to world markets to be way, way in excess of Gresham.

In answer to the points you raised:

"It is a pity you have spammed the analysis on every BPRG thread, like you seem to do with most of your posts."

I was simply appealing to the (and previous) mass BPRG audience that browse ADVFN BB's. I believe this thread is now the only real one but with so many versions it is difficult to find the right home.

Secondly, like yourself, I welcome comments in agreement / disagreement as that is the basis of discussion and hence is welcomed on all threads.

"If you recall it was due to the over excitement in the recent past that BVRG got so very over-bought, and resulted in inexperienced investors getting very heavily burnt. I had hoped that posters, claiming they had been professionals, would have taken a more professional approach in their analysis and cared more for the inexperienced investors."

I must say that I am now inactive and not classed as a professional anymore, hence my contribution to the BB's which I couldnt previously have done. But point taken.

No one, not even myself can be blamed for investors timing - we are all big boys and responsible for our own actions. Remember, finding good companies is relatively easy - the timing is everything and even those that might have paid 160p, if held will be rewarded many times over if they take, like I the LT view.

It was the MM's that marked the price up to 160p and not the likes of myself. In fact I posted nothing about price expectations at this point and was simply the pure eurphoria of investors when they got a glimpse of the potential of this stock.

The people that got burnt were traders. You will never successfully trade a stock such as BPRG short term unless you have inside info or its pure luck. The RNS's have been frequent in recent months but there may come a time when they slowdown and become less frequent, in which case the share price will be stagnant and retrace making short term trading extremely risky.

"FYI, some of the things I find wrong with your analysis:-
1) I don't recall you allowed for Tax, which would reduce your figures by 30%"

Yes, I agree but you cant get too bogged down in the nitty gritty with a company in the early development phase of growth. BPRG's revenue alone is very hard to value as we both agree. Similalry you cant account for many items, but as the contracts are shrouded in secracy so as not to 'let the cat out of the bag', so we must at this juncture concentrate purely on revenue streams and then, yes, look at the offset costs later when we have a greater knowledge. In saying this, the % of pharmas turnover in royalies has no direct offset costs -it goes straight to the bottom profit line.

"2) you assume a market share of 25% of the OTC market, but on what basis? The OTC company that has got the EXCLUSIVE rights to BVRG's product, current only have a 11% market share. So as a minimum you are assuming that the company will double its market share almost over-night. That's unrealistic. You even make matters worse by a throw away remark that maybe getting 50% market share is not out of the question!!"

In fact they have 13% of the market share, if we are talikng about the OTC contract. Other pharmas will be forced to follow suit as they understand that breaking in to many new markets globally has to involve serious allowances for moral and religious interests which currently forbid today the use of Gelatin being based on animal materials, particlularly in Asia.

They will be forced to undergo contracts incurring large royalty penalties to BPRG to have any interest in these markets. I was purely making estimates based on this contract and others that are most probably in the pipeline. As I stated. Please remember I also omitted likely estimated revenues on their other products from my valuations.

Yes, I believe the days of Gelatin are numbered and BPRG are an on-going and growing. XGEL is so heavily patented no one can simply reproduce BPRG's product without serious legal ramifications or more likely yet another healthy royalty stream to BPRG as other companies realise their only survival will be based on BPRG's products.

"3) you make no analysis of what percentage of the OTC business even lends itself to BPRG's technology i.e. an amateurish omission. For example do liquid medicines like cough mixtures? I think not. I am sure there are many others."

I feel I explained this above.

In fact with XGEL, liquid based medicines can be encapsulated, but yes some estimates have to be made on likely growth, but as BPRG since its inception last year have increased in capitalisation to at its peak of 160p by 1000% - I dont think that this is too unrealistic?

"4) I recall one of the more knowledgeable long-term posters, has already brought you up for assuming a 2% royalty stream, and that the figure may in fact be almost half that."

I disagree - they will receive $1 to $1.5 million equating to 5% of the OTC pharmas current product protfolio. This pharma has a 13% market share of the $11.1 billion OTC market. Dont forget also new products and work in progress as stated in GH's "letter to shareholders" are also to be factored in.

"5) You assume royalty revenue = 100% profit, there is something called margin you have forgotten. The margin may be high, but it won't be 100%. In any case there will be on-going R&D costs as well, otherwise the company stands still and won't have any new technology/products to offer. Fine, you could make an zero R&D assumption, but then you could only value the comapany on a Discounted Cash Flow basis, not a PE basis. The underlying justification of using PE in valuations, is that the business has an on-going and growing nature over many, many years, and especially so, if you use a PE of 20."

GH categorically stated that the royalty stream is pure profit and gets added to the bottom line. In relation to your second point, yes the business does have an on-going and growing nature over many, many years.

"6) You say at the start, lets be Conservative, but there is nothing conservative about your analysis."

I think we agree to disagree here.

"I realise, you will be hurt by me being so blunt, but someone has to try to stop a repeat of the recent share price fiasco, and private investors getting burnt. So please understand I am really sorry if you feel hurt."

I dont think that their was a fiasco as such. The MM rallied the price and them it retraced in addition to the fall caused by the falling US markets and the Madrid / Hamas situation. In fact I feel BPRG held up really well.

As stated earlier I am not hurt and hope I have justified my actions. The only people who have been hurt here are punters: it has been said time and time again by myself and others - this is a LT play and not for trading. If you trade you will probably get as many right as you get wrong, so whats the point of taking the risk on margin or T trading.

"Now, don't get me wrong, I'm a BPRG bull and heavily long, and the share price may one day get to the levels of your prediction"

You hit the nail on the head: this is looking further down the field and not today, although my justifications I uphold but the market will let market forces dictate the share price by I would say 60%, the other 40% being fundamental. This is why we continuously get undervalued companies who go through a process of rerating and hence arbitrage situations arise as will be case with BPRG.

Likewise, dont get me wrong Im on your side but just trying to justify my comments. The global drug market is worth in excess of $1000 Billion, of which 70% is based on oral drugs.

As Gelatin will die and today XGEL is the only real alternative in its finished state (fully patented), so 10 a share is very realistic in the years ahead. The higher valuations (100) per share will probably never be reached as BPRG will most likely merge or be taken over.

This is a revolution in encapsulatin not just the drug industry but so many different fields. This is a mini revolution in the making.

PS I wont post it on the other threads anymore.

Best Wishes

Thanks for the information nematode, nice to see some constructive comments.

Lots of potential

lots and lots of potential

sorry

OK Post 429 well worth the read...cheers

It appears bid being prepared but may not come in until after SEO case.

SEO likely to leave it until 24th hour and then try to settle out of court leaving Scherer free to put in bid. Alternatively, if bid not attractive to key shareholders (unlikely to be hostile as Scherer will need to work with BPRG's expertise and existing set-up), we may see Scherer take an equity stake in BPRG.

I don't think we need to look in terms of ONE major license for the technology GH referred to as being close to completion. We are surely looking at major, major newsflow for BPRG in April. In licensing terms THINK BIG, THINK TERRITORIES, THINK PLURAL. NOT TOO HARD TO SWALLOW IS IT!!

AS for Aquafilm THINK SIGNIFICANT REVENUES, THINK CLOSE TO 50% MARGIN, THINK SIGNIFICANT PROFIT FOR BPRG THIS YEAR JUST ON EXISTING AQUAFILM PRODUCTS. IMAGINING THE ENORMOUS POTENTIAL OF NEW DRUG DELIVERY PRODUCTS JUST GIVES ME A HEADACHE. WHAT COULD I TAKE THAT WOULD CURE IT QUICKLY !!!! ANY IDEAS OUTSIZECLOTHES.COM?? Everyone missed your post LOL

In addition to Aquafilm profits we should have globally known product on the shelf for two technologies or three technologies late this year plus ostomy revenues coming in early next year.

Brokers note should be fun reading I reckon but seems more pressing things happening!! People have spoken about year end share prices of 250p or 300p by year end. If BPRG are not taken out before hand I believe that will happen by JULY. We may trade around these levels before the fun starts but start it will and meanwhile it looks like a brief opportunity for those quick enough to grasp it.

LOOKS LIKE APRIL IS GOING TO BE A BUSY MONTH. ENJOY !!!

Whats this about an approach is someone just stirring things up? Who has mentioned a takeover or am I getting my wires crossed?

Just sitting in there with these and waiting for news. No need to panic.

cheers Gf.

GF,any more news on these?????

From another bb by our learned friends:

It's even better than that. [ie. ostomy operation; gelatin-free tablets for vegetarians; highly marketable; cost-effective].

Rumour is that at least 2 major global pharma's have made internal decisions to be out of gelatin within 4-5 years. If 2 have made that decision, the others, and the OTC drug manufacturers, will surely follow.

X-Gel is less expensive and has much better performance characteristics than gelatin.

And BPRG is in product development agreements (stability trials involving X-Gel) with 3 or 4 of the top, top pharmaceutical companies in the world.

Not too shabby!!!

And the stability trials are going extremely well according to all reports.

And BPRG's intellectual property is extremely far-reaching and very comprehensive according to many posters on this board.

I'd say that BPRG was able to go the AIM and raise 5,000,000 from very well-known institutions because BPRG probably has the goods.

Market size??? The tablet-wrap business in the US is estimated at $200,000,000 annual revenues...and that's a drop in the bucket for the entire encapsulation business. Several billion pounds annually.

And BPRG stands an incredibly good chance of being valued in pounds very soon.







Now ask yourself one question. Are Cardinal HEAVILY involved in soft gel capsules. These guys might have stood by when BPRG was signing development deals but when it comes to licensing a technology with a top ten player then they are going have to think again and think fast.


My understanding was that as part of the AIM listing for which Collins Stewart were nominated advisors, the Directors and Barry M, who was retiring as Chairman at the time, were obliged to sign a twelve month lock in agreement which will finish in May. I also believe that CS will have demanded first refusal on any shares being sold at the end of the lock-in period. It would seem logical therefore that all these holdings be put into a CS nominee account. Perhaps someone with the Directors holdings to hand could confirm this?

I know that Barry Muncaster does indeed have a twelve month lock in clause, and yes, Collins Stewart have demanded first refusal on his shares that can only be sold at the end of the lock-in period.

Barry Muncaster leaves his consultancy role at BioProgress this July, this is when the court case with Stanelco has been set for. Stanelco - July - ouch!

What would Scherer want with BioProgress' technology? Well for a start it will extend the life of a hell of a lot of their patents. Why would Scherer just sit back while other major US pharmas sign licensing deals for the technology?

I think it is really important that investors think beyond just Europe and North America for this technology. 7% of Hoefligers turnover comes from Asia. What we need to be thinking of is territories, in terms of Australasia and the Far East. These are markets that no one has bothered to consider yet!

Yes, there are so many clues pointing to Perrigo. The point about the problems with a supplier means BPRG have linked with one very highly motivated company keen to get product on the shelf as soon as possible if, as seems likely, it is Perrigo.

We could therefore have products on sale from four sectors of BPRG's business by the end of the year:-

1) Aquafilm is already happening and the high margin sales will produce a healthy profit for BPRG - lets be cautious and say 3m for this year

2) Tablet Wrap (assuming it is Perrigo and they have lost their supplier then their will be commercial sales this year).

3) Swallow - that's the dark horse for this year regarding commercial products but, there again, a dark horse won the national so I wouldn't bet against it.

4) Flushable ostomy product. Due for launch later this year according to GH.

On top of that we are looking at licenses for Septum, WaferTab and Swallow in the coming months with one deal fairly imminent according to GH interview. Plus FMC sales to pharmas once the full or even a scaled machine Nrobe is delivered - I'm not sure if Farmasierra/FMC are awaiting a replicated minature model or a full machine but it will not make any difference for sales purposes. A minature model has to exactly replicate the full model so that the testing done on the mini model satisfies the authorites for things like stability tests. This should come in the next couple of months based on the timing for the previously announced Farmasierra order. To add icing on the cake BPRG will have get probably get bid speculation factored in once the SEO case is out the way.

One thing we are not going to be short of is newsflow. So we are looking at a newsflow driven stock with existing revenues bringing it on course for healthy maiden profits. No wonder there are rumours that significant U.S. institutions would love to climb aboard if their investment could be facilitated.

They can't bash it for running out of cash - warrants money means it must have about 18m in cash, they can't bash it on not being on course for profitability after the Aquafilm acquisition and they can't bash it for not having plenty of potentially stirring newsflow with the prospect of multi-million pound initial deals addressing billion pound markets.

A license for any of BPRG's technologies is a major 'company maker' deal. The deal with FMC was a company maker, the OTC deal sector deal came into that category and there are, as detailed above, plenty more 'company maker' deals in the pipeleine. That's why it pays to look at each technology and value BPRG accordingly as otherwise so much gets missed.

GF,any views???

Bid price now 98p, no real chart support until the the 75p level! But the charts don't tell us everything.

Piece from Lemming investor

Conrad Windham (Guest Author)

April 7 2004

It is not an enviable position to be in, that is, of the analyst whose job it is to compile a report on BioProgress right now. Only this weekend I stumbled across an old announcement from March 2000, where BioProgress had signed an agreement with JT USA, and Dye Precision to develop a new type of paintball using the XGel technology. It was a reminder of just how revolutionary and extensive this technology truly is.

This article is not a stab at forecasting a value for the whole of BioProgress, but rather to concentrate on the recent acquisition of the edible film assets of Aquafilm. The completion of this acquisition was announced to the market on 1st April, and the acquired assets are now a wholly owned subsidiary of BioProgress called BioFilm LLC.

CEO Graham Hind already had a working relationship with Aquafilm prior to the acquisition, as the company had been a third party film supplier to BioProgress. Therefore when Hind was made aware that the owners of Aquafilm, who were in their late 60s and wished to retire, were prepared to sell the business he moved swiftly to secure the edible film division.

The terms of acquiring the edible film assets of Aquafilm look to be very shrewd indeed. The deal comprises an upfront payment of $3.5 million and $7.5 million as an earn-out on a $1/$1 basis against net profit. Full purchase completion is anticipated to be made by 2006.

It is worth taking a look at Aquafilms forecasts for the edible film division:

Year To 31st December
US $ Million 2004e 2005e 2006e 2007e
Revenue 8.8 16.5 28.9 48.1
Net Profit 3.2 5.2 9.1 16.1
Profit Margin 36% 32% 32% 34%

These forecasts are ideal for showing just how profitable BioProgress should be in three years time come 2007. The forecast of $16.1 million profit on $48.1 million of turnover equates, at todays exchange rate to 8.78 million. Ignore the XGel technologies and assume that BioProgress comprised just the edible film division of Aquafilm. Profit of 8.78 million equates to EPS of 7.8p and puts BioProgress on a 2007 PE of 13.

This forecast PE excludes both of the current XGel licensing agreements. When factoring in the licensing deal with FMC BioPolymer for NROBE which is expected to generate a minimum of $160 million of revenue to BioProgress over the first six years following commercialisation, we can begin to appreciate the potential revenues that BioProgress should be generating in just three years time.

Current customers of Aquafilm include the following:

Procter & Gamble The Vic Vapour Strip
Boots Vitamin Strips
Colgate Teeth Whitening
Pepsico Breath Freshening Strips
Reckitts Mouth Ulcer Strips
Home Market Foods Nutrastrips
Healthy Moments Spiderman

Hind has already thought of a new market for Aquafilm to target, pets. It has always been notoriously difficult to get an animal to swallow a tablet, but the chances are a meaty flavoured strip will go down well, perhaps even considered a treat by the animal.

The cost of acquiring Aquafilm and bringing it up to a high standard is not a massive drain on BioProgress cash resources. With the recent exercise of the warrants there was 18 million in the bank; 4 million of this will be spent on Aquafilm. $3.5 million on the initial purchase, $1 million of working capital and $3 million capital investment in order to secure full FDA Pharmaceutical plant approval to exploit the new WAFERTAB technology.

The next two months sees the launch of two of the new edible food strip products in America. Spiderman vitamin strips are being launched in May for the new Spiderman 2 movie, and Home Market Foods launch their Nutrastrips, available in different varieties such as Immune Boosting, Caffeinated, Vitamin or Energizing. Combined the sales forecast for these two products is $4.7 million. In the UK Boots have recently launched vitamin strips. Revenue from the new acquisition is already rolling in.

There is an interesting twist with the acquisition of the Aquafilm assets. BioProgress have a court case set for July against Stanelco with regard to entitlement to key patents and patent applications in the portfolio of Stanelco. Stanelco have a major contract with the R P Scherer division of Cardinal Health to develop its Ingel technology, the only place where Stanelco can get hold of the required film is Aquafilm. A clause in the contract with Stanelco allows Scherer to cancel its contract in July. It is now apparent why Stanelco pushed for a court date in September, the fact that it is set for July allows Scherer to break its ties with Stanelco, should it lose the court case.

The Aquafilm acquisition therefore strengthens the strategic position of BioProgress, brings in immediate revenues and profits, accelerates the development of WAFERTAB, and accelerates the film supply for FMC BioPolymer as well as accelerating the US film supply for TABWRAP. All in all then, a terrific acquisition which helps to highlight why BioProgress remains cheap.

It should be noted that Conrad holds shares in BioProgress

http://www.lemminginvestor.com/BPRGconradWindham.html