Buying BioSpecifics Technologies
“In investing, what is comfortable is rarely profitable.”
― Robert Arnott
The Portfolio
The portfolio is holding up well today, closing just under 12% and still beating the S&P 500, our benchmark index which closed at 11.25% today.
Today I did some homework on a healthcare name, BioSpecifics Technologies and liked it enough to buy 25 shares.
Today's Buys:
BUY 25 shares of BSTC @ $58.81/share.
Background
BioSpecifics Technologies Corp., is a $429 million biopharmaceutical company, engages in the development of an injectable collagenase clostridium histolyticum for various indications in the United States and internationally. The company offers injectable collagenase for the treatment of Dupuytren's contracture and Peyronie's disease under the XIAFLEX or Xiapex brands. It also provides injectable collagenase to treat frozen shoulder, cellulite, canine lipoma, lateral hip fat, plantar fibromatosis, and human lipoma, as well as uterine fibroids. In addition, the company engages in the development of other clinical indications for which collagenase injection has been tested, such as keloids, hypertrophic scars, scarred tendons, glaucoma, herniated intervertebral discs, and as an adjunct to vitrectomy. BioSpecifics Technologies Corp. has a development and license agreement with Endo Global Ventures. The company was founded in 1957 and is headquartered in Lynbrook, New York.
The most unique aspects of BTSC is that they employ only five people and derive the majority of their revenue from one product, Xiaflex. Xiaflex is marketed by Endo Pharmaceuticals, another factor that moved me. I hate seeing small pharmaceutical companies build a sales team when a big one can do it more efficiently. BTSC has an unusually high insider ownership in excess of 26%. BTSC's small number of employees and reliable royalties produces a health free-cash-flow; in short the company can grow with small amounts of capital.
Xiaflex is being tested for a new indication, cellulite. The study saw a much faster than expected patient enrollment, which may be an indication of the demand in the marketplace for meaningful treatments for cellulite; a condition that effects 85% of post-pubertal women. Phase 3 results are due out in 2019. Xiaflex is also being tested for three other indications and has a patent life until 2028. From what I've gathered the manufacturing process for Xiaflex is complex and hard to duplicate which may provide for a greater life span before generics and bio-similar's take market share.
An additional event to look forward to is that BioSpecifics will repurchase up to $4 million of its outstanding common stock through a broker on the open market. This decision reflects BioSpecifics' continued confidence in achieving its corporate goals and commitment to increasing value for its stockholders.
BioSpecifics P/E ratio shows a discount compared to an average of 22.88 for the Biotechnology industry, and a value about the same as the S&P 500 average of 21.32. We would say that BSTC trades at a discount to its industry and equal to the overall market. Looking at price to book, price to sales.
Buy between $58 - $62
My 12 month price target is $80
"Markets don't go to zero, Portfolio's do.
Buy quality, be patient...and use sun screen"
- Clay Baker
Stay Invested,
Clay
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Keep Me Honest
S&P 500 declines to 2,350 or more (1-3-2019)
Healthcare and Biotech sectors outperform (1-3-2019)
S&P reaches 3,000 by year end (1-11-2019)
CSCO reaches $60/share (1-18-2019)
VEEV reaches $145/share (2-14-2019) (achieved $145.23 on 5-10-2019)
CVS reaches $91.50 (2-27-2019)
Bull market takes another leg up (4-7-2019)
The Fed will lower rates 1-2 times (5-13-2019)
Clay's Rules
Rule #1: Don't lose money
Rule #3: Portfolios go to zero, markets don't
Rule #4: When a good stock you own drops 10% below your cost basis, add shares
Rule #5: Bull markets aren't sustained without the Transports
Disclosure: I am personally invested long in some or all of these stocks or funds that appear in the Stay Invested portfolio and may purchase or sell shares within the next 72 hours. I am also invested in other stocks and funds that do not appear in the Stay Invested portfolio but may be mentioned or related to this article. It is not my intention to advise or encourage the purchase or sale of any security. I am invested long in these securities mentioned in this post:
CVS, CSCO, VEEV, STZ, AMZN, NVDA, BCRX, GS, BDSI, VEEV, VTI, GLD, HD, AWR, XLNX, MRVL
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. This article is not intended to offer investing advice, guarantee 100% accurate predictions, or to be interpreted as providing a personal recommendation.
