A free share recommendation and a very special subscription offer to all our loyal Fat Free readers but only if you act before 5pm June 30th
Dear Fellow Stock Market Investor,
The 2006/7 tax year ends on June 30th 2007.
As an end of year bonus, the Fat Prophets team is giving you two great reasons to cheer
Reason #1 To Cheer
Just last week, we rushed to our Fat Prophets Australasian Report Members our latest buy recommendations.
One of them is a Melbourne-based biotechnology company. We don't usually go fishing in the biotech waters, as these types of companies are generally highly speculative and are frequently loss-making.
So we found a company
- That is set to deliver a maiden profit in the year to June 2007;
- Whose most successful drug to date is being stockpiled by governments in even greater quantities for defence about possible bird flu pandemics;
- Whose share price has soared over 50% since last September, but still remains 75% below its peak prices of 1999/2000,
We simply couldn't look past this particular biotech, so we confidently recommended it as a buy to our members.
Normally, recommendations such as this are reserved to Fat Prophets Australasian Report Members.
But, as a special end-of-tax year bonus to all our loyal Fat Free readers, this week we are exclusively revealing the name of our Melbourne-based biotech. The share price was $1.70 when we recommended it to our Fat Prophets Australasian Report subscribers last week.
At around $1.78, it trades a little higher than that now, but we still think the company is cheap. More on that a little later, including an extended buy report, normally reserved exclusively to Fat Prophets Australasian Report Members, but free today to Fat Free readers.
But first, we offer you our second reason to cheer
Reason #2 To Cheer
In the last 12 months, the Australian stock market, as measured by the All Ordinaries index, has soared by more than 25%!
To celebrate, as an end of tax year special, and only until 5pm Saturday June 30th 2007, we are offering Fat Free readers the chance to save almost $400 by subscribing to two of our market-beating reports
- The Fat Prophets Australasia Report - usually $695 per annum
- The Fat Prophets Mining & Resources report - usually $695 per annum.
Instead of paying $1,390 to subscribe to both reports, for a strictly limited period of time, you can subscribe to both Fat Prophets Reports for a year for just $995!
And for some people, subscription costs may be tax deductible - obviously check with your accountant - so the timing of this offer may be perfect.
Click here to be rushed without delay straight to our special end-of-tax-year subscription page.
Or else, read on for more details about our two Fat Prophets Reports, and about what you can expect to receive as a truly valued Fat Prophets Member.
But before that, as promised, we bring you the extended buy report of one of our most recent and exciting stock recommendations.
Your Free Stock Recommendation
Without further delay, let us formally introduce our free stock recommendation, as emailed last week exclusively to Fat Prophets Australasian Report subscribers.
Below is an abbreviated version of our detailed buy report. We hope
- It gives you a flavour of what is emailed every week to Fat Prophets Members. This is just one of our most recent recommendations. Our weekly email to Members usually contains two or three stock recommendations.;
- It shows the level of research and detail the Fat Prophets analysts go to in order to bring you superior investment ideas.
- Over the long-term, it turns out to be a profitable, market-beating investment for all people who invest in the company at around today's prices.
As you will note, we have classed this particular recommendation as "High Risk", and therefore, potential buyers of the stock should consider including it only as part of a diversified portfolio.
Obviously, you should always do your own research and make your own investment decisions, as it is up to you to take ultimate responsibility for your choices. Individuals should talk with their financial planner or advisor.
Biota Holdings - Bargain Biotech
Buy around $1.70
High Risk Recommendation
Market Capitalisation - $310 million
Stock Code - BTA
We were attracted to Biota Holdings because, as a biotech, it is making money, an unusual occurrence. Moreover, the company has de-risked the drug development program by partnering with international pharmaceutical companies. So on a risk/reward basis, we believe the stock is very attractive.
Biotech companies are not renowned for having earnings. More commonly, the average biotech firm chews through significant amounts of investor capital in attempting to take a drug from development through to the commercialisation stage. Considering this, a good deal of patience is required before an investor will see any earnings.
Biota represents something of a rarity in the biotech sector. That is, the company generates earnings for investors and is set to deliver a maiden profit in the year to June 2007. And what's more, we believe the market is not factoring in the company's earnings potential. While we previously thought the words biotech and cheap were mutually exclusive, Biota appears to be the exception to the rule.
Based in Melbourne, Biota describes itself as an antiviral drug development company. Biota's most successful drug to date is zanamivir, the first-in-class neuraminidase inhibitor for the treatment and prevention of influenza.
Biota licensed zanamivir to GlaxoSmithKline (GSK) way back in 1990 and the British pharmaceutical giant began marketing the drug as Relenza in 1999. Relenza is used to treat seasonal influenza and is currently being stockpiled by various governments for defence against possible pandemic outbreaks of avian (bird) influenza.
And this is where the story becomes interesting for Biota. Governments around the world are stockpiling influenza drugs and this large and growing market is shared between Relenza and Tamiflu.
Relenza is delivered through a disk inhaler device, whereas Tamiflu is taken orally. In the early stages of the stockpiling process, Tamiflu grabbed the majority market share, partly because GSK wasn't prepared for the surge in demand. However, there have since been some side effect issues with the Tamiflu drug. As a result, orders of Relenza are now picking up strongly and GSK is looking to ramp up production to meet the increase in demand.
GSK have increased their production of Relenza from 1 million courses in 2005 to 30 million courses (annualised) in the first quarter of 2007. This will translate into a significant increase in royalty payments for Biota in 2008.
The market for Relenza consists of the 'seasonal' and the pandemic market. The seasonal market relates to the standard winter 'flu and has a market size of around US$1 billion. Biota estimates the pandemic stockpiling will total around US$4-5 billion by 2009, with an annual replenishment market of US$1 billion after governments finish building their stockpiles.
The size of these markets, along with GSK increasing production to meet strong demand, represents a significant opportunity for Biota.
Biota's Drug Pipeline
Biota is working on the next generation of products, known as LANIs (long-acting neuraminidase inhibitors). Also inhaled, LANIs provide more potency and a longer period of action. This allows them to be administered only once a week, instead of twice daily as is the case with Relenza.
LANIs testing has already commenced in Japan and the UK. They are likely to supersede Relenza in the pandemic/stockpiling market. However, provided the trials go according to plan, LANIs will not hit the market until around 2010 - 2011. This is to coincide with the replenishment of government pandemic stockpiles, given that both Relenza and Tamiflu have a five-year shelf life.
US-based company MedImmune has a licence and collaboration agreement to develop Biota's lead compounds aimed at RSV (respiratory syncytial virus). Respiratory syncytial virus (RSV) infects people of all ages, particularly infants, causing similar symptoms to influenza and occurring at about the same frequency. The virus is highly contagious and according to Biota, roughly 50 percent of children will experience two RSV infections by the age of two.
The World Health Organisation estimates global annual infection and mortality figures for RSV to be 64 million and 160,000 respectively. In the U.S., estimates put RSV-associated hospitalisations at between 125,000 and 250,000 per annum.
Biota's licensing agreement with MedImmune has the potential to deliver US$107 million in milestone payments. MedImmune will fund development costs and Biota stands to earn any future royalties from the successful sale of the drug.
In November 2006, Biota signed a licensing and research collaboration agreement with Boehringer Ingelheim to develop and commercialise Biota's novel nucleoside analogues designed to treat Hepatitis C Virus (HCV) infections. Biota is set to earn $US102 million in milestone payments and research support. Furthermore, Biota will enjoy royalty payments in the event of successful commercialisation.
Lastly, Biota is developing a treatment for Human Rhinovirus (HRV), also known as the common cold. While widespread and generally self-limiting, HRV is a major cause of hospitalisation for patients with underlying respiratory conditions. This is Biota's target market. Phase I trials are complete, and the company plans on completing Phase IIa trials before looking for a development partner.
Financials & Valuation
Biota is on track to report before tax earnings of around $18 million for the year to June 2007. With GSK now ramping up production of Relenza, we would expect royalty payments to continue growing throughout 2008.
There are few mainstream analysts who cover Biota, so there are no consensus earnings forecasts. However, given projections of $18 million in earnings for this financial year, the company trades on an earnings multiple of around 17 times. In our view, given the expected growth in Relenza royalties, Biota is very cheap. The stock also looks good from a balance sheet perspective. As at December 31, the company had around $42 million in cash.
Share Price Chart
From a charting perspective, growing investor support has seen Biota gain around 50 percent since September. This marks a significant improvement in the longer-term outlook, reviving the upward trend that commenced in 2005.
As displayed on the daily chart, the latest gains have been characterised by a series of sharp rallies followed by periods of consolidation at successively higher levels. Since achieving a 13-month high of $1.89 in May, Biota has been consolidating above $1.62. We expect that this level will continue supporting prices in the near term, with additional support at $1.51 underpinning the upward trend.
In the months ahead, we expect the long-term re-rating of Biota to continue. A break above $1.89 will initially target the $2 region with longer-term potential for gains toward $2.75 and beyond.
As such, we recommend Biota as a buy to all Members around $1.70.
Is This Another Big Stock Market Winner?
The Biota recommendation is just one of many shares we are currently recommending.
For example, just last week, also recommended to Fat Prophets Mining & Resources members was a tiny mining company. At the time, the share price was just 12.5 cents and the market capitalisation just $14 million.
The company is a grassroots exploration company focusing on base metal opportunities in Mexico. It has a modest market value, an excellent exploration team, and a unique strategic alliance allowing it access to a production line of quality exploration opportunities.
We concluded our report by saying " we believe there is very little downside for Members, but rather, for patient investors, there is potential for tremendous upside over the longer term."
Since we published our buy recommendation, the share price has jumped by around 30%. Even so, the company is still only valued at under $20 million. As we mentioned above, patience will be required, but if this Mexican miner can strike it rich, we believe long-term investors will be highly rewarded.
Instantly Build Your Own Diversified Share Portfolio
Between the Fat Prophets Australasian and Mining & Resources Reports we currently have around 30 buy recommendations.
New subscribers will have instant access to all those buy recommendations, including the Mexican mining company mentioned above.
Amongst our recommendations are some of the largest Australian companies. They are big, diversified multinationals in their own right, and it's these types of companies that can provide the solid foundations for any stock market portfolio.
But, using BHP Billiton as an example, that behemoth is worth over $115 billion. By the rule of large numbers, their share price simply can't grow at the same rapid pace as some we've seen in recent times. Also, if BHP Billiton discovered a new large uranium or nickel deposit, for example, it is not going to dramatically and instantly affect the share price.
That's where, as part of a diversified portfolio, smaller companies like our Mexican miner mentioned above could add a bit of excitement to your returns.
Some of these companies in the Fat Prophets portfolios are still worth less than $30m. As we've seen many times before, smaller companies can provide you with some stunning winners.
For example, each of these companies was initially recommended to Fat Prophets Mining & Resources subscribers when they were worth less than $30 million. Just look at the stunning gains they've racked up since
Marathon Resources - Up an amazing 766%* in just over 15 months!
Image Resources - Up an astonishing 590%* in a little more than 18 months!
Terramin Australia - Up a breathtaking 523%* also in just over 18 months!
The Fat Prophets Difference*
That sort of performance is no fluke*. It is the result of years of experience, plenty of skill, hundreds of hours of research, and a complete dedication to selecting and profiting from stock market winners.
(Performance* correct to 30th March 2007)
If you'd invested $100,000 on January 1st 2001 and followed all our recommendations from then until the end of 2006, your $100,000 would now have turned into about $553,867*!
As our track record shows, we know how to sort the winners from the losers.
You may have heard of Warren Buffett. He is the 3rd richest person in the world, sporting a net wealth of over US$50 billion. At heart, Buffett is an investor, and it is through stock market investments that he has accumulated this great wealth.
We are great fans of Warren Buffett. One of our favourite Buffett quotes is
"If you don't know jewellery, know the jeweller."
Using this metaphor, we like to think of ourselves as the jewellers.
The Fat Prophets analysts are often seen on Bloomberg, CNBC, Sky News and ABC television giving expert advice on the stock market. We are regularly quoted in the Australian Financial Review and other national newspapers. When the financial media want an independent opinion, they talk to us.
What Stock Market Investors Like You Have Been Saying About Fat Prophets
But don't just take our word for it. Here's just a small selection of what our subscribers have to say about the Fat Prophets report
"A thoroughly recommended publication"
I've found the fat prophets publication to be an informative and unique investment tool. For anyone serious about share trading, I believe this should be an essential business investment in itself. The prophets clearly explain their recommendations whilst spelling out the importance of managing risk. I've found that not only is their stock selection criteria great at avoiding the "hype" sectors, it's brilliant at finding the hidden gems! Not only are the charts great at providing a visual presentation of upside potential, they're tremendously educational as well. A thoroughly recommended publication.
-- L Lane
"I have chalked up in excess of $120,000 in profits "
Thank you for your great service. Since becoming a member, I have chalked up in excess of $120,000 in profits Keep those reports coming!!
-- C Simpson
"Wonderful subscription service "
I want to thank you for such a wonderful subscription service. I am going on my 3rd year and have added the mining report as well I have more than paid for the subscription with just your BHP recommendation. Many thanks to all.
-- Shannon Woollett
Our Very Special End Of Tax Year Offer
The end of the tax year is just around the corner. To celebrate this, and another stellar year for the Australian stock market, we are unveiling our best offer yet.
And remember, for some people, subscription costs may be tax deductible. As you will know, timing is everything, so if you can claim subscription costs against your tax, the timing of this offer may be perfect!
Each Fat Prophets Report usually cost $695. Given the 30%* plus annualised returns from the hypothetical portfolios* of BOTH the Australasian and Mining & Resources Reports since October 2000, we think that's a very reasonable price.
If you subscribed individually to each report, your annual cost would be $1,390.
Save Almost $400
But for a strictly limited period of time, we are offering an annual subscription to BOTH of our reports for the amazingly low price of $995. That's a saving of almost $400!
Let's spell that out again
Fat Prophets Australasian Report - Usually $695 per annum
Fat Prophets Mining & Resources Report - Usually $695 per annum
Subscribe to both market-beating reports for a year at just $995, and save $395!
Depending on your tax situation, subscription costs may be tax deductible.
But there is a catch.
This offer is strictly for a limited period of time, and must end 5pm Saturday 30th June 2007.
Hurry rush me without delay an annual subscription to both the Fat Prophets
Australasian AND Fat Prophets Mining & Resource Reports so that I can get
on the road to stock market riches.
What You'll Get As A Fat Prophets Member
As a member, you'll automatically receive our weekly email, packed with the latest and greatest profit-making opportunities. Members also get instant access to all of our archived recommendations.
But it doesn't stop there. Every so often we come across a buy recommendation so exciting and so compelling that we just can't wait until the regular email update.
So, to enable you to buy at the lowest possible price and before these companies are discovered by the stock market community at large, we rush a special buy alert email directly to our members' in-boxes. The moment we find these potentially life changing stock market recommendations, rest assured, our Members will be the first to know!
We're so confident you'll like and profit from our service that if for any reason you'd like to cancel your subscription in the first 30 days, we'll refund your payment in full with no questions asked.
This offer is exclusive to readers of this email, and must expire at 5pm Saturday June 30th 2007.
HURRY: Click here to subscribe today, before the end of the tax year.
With many stocks going up daily, we urge you to act now in order to access our current recommended stocks and our very special subscription offer. We wish you happy and profitable investing.
Fat Prophets where wealth creation is our mission.
P.S. Don't forget that our end of tax year special offer expires at 5pm Saturday 30th June 2007! Click here to instantly subscribe to both our market-beating reports and SAVE $395. As you would expect from Fat Prophets, the company The Australian Financial Review called " among the liveliest and most contrarian of market commentators", it comes with our watertight 30-day money-back guarantee. If for any reason at all you don't like our service, we'll happily refund your money in full.
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Ph: (02) 9252 7171
*Performance is hypothetical and based on recommendations made in the Fat Prophets report. The table is updated quarterly. Transaction costs have not been taken into account. Past performance is not a reliable guide to future performance, and investors should be aware that returns can be negative. For a full explanation of the performance calculation methodology, please click here.
Ministry of Sound's Sessions 4 has arrived. Have a listen!