After the euphoria of a sweeping Conservative election victory, at least for stock market investors, it’s back to more humdrum business. Here’s a report on the Annual General Meeting of Bioventix (BVXP) which was held yesterday.
Bioventix is developer of antibodies used in medical diagnostics. It’s a small company with only 12 employees but revenue was up 16% last year to £9.3 million and EPS up by 3.7%.
Talking to CEO Peter Harrison before the meeting, he indicated there would be no problems with Brexit which is a good thing as that is now likely to go through. He also mentioned that they had discussions with their auditors about their investment in Norwegian company Pre Diagnostics. They kept the valuation at cost.
The formal business was taken first and surprisingly two of the non-executive directors got significant votes against them. The board is unaware of the reasons, and neither am I, but they will be looking into it. Peter Harrison got 100% of votes FOR re-election.
There was then a presentation from Peter which I will cover briefly. He mentioned the lab upgrade which is of furniture and equipment and a slight increase in footprint, but it hardly sounds a rash expenditure. This is an example of how conservatively the company is managed.
On sales revenue, he mentioned that the Vitamin D assay is an increasing proportion of revenue which some people might be concerned about, but it is spread over a number of customers. As he has said before, the revenue from this product is likely to plateau – in reality only grow at the same level as the general diagnostics market (5% to 10% per year?).
But he made some positive comments about the ramp up of Troponin sales. Adoption has been slow simply because of the slow change in hospital protocols to the improved diagnostic. In response to a question from Leon Boros, he confirmed that the FinnCap forecasts of £0.5 million in the current year and £1.0 million next year from this product were reasonable. [Comment: but what might FinnCap know about forecasting sales of products in such a specialist area – they surely must have relied on the company’s and management’s estimates. This is the kind of sophistry one gets due to companies not being able to disclose forecasts.]
Leon also asked a question about information the company gets on sales in China. The distributor provides information on the end-user and its purpose, and the company also has the ability to audit the figures.
Peter then discussed the current research projects which might turn into products and revenue in a few years’ time. He focused particularly on pollution monitoring where they hope to develop a test to identify an individual’s exposure to pollution. This is of course is a hot news subject at present with reports of shortening of life from lung and heart disease and numerous other alleged medical problems caused by air pollution. These reports are commonly based on epidemiological studies (correlating health problems or life expectancy with local air pollution). But these are often scientifically dubious in my view as removing all the confounding correlations is difficult and different studies show different results. There is little evidence of direct causation – indeed there are some contradicting ones. A urine test that would give data on exposure of individuals would be of great assistance. One possible market for such a product would be for research, but other markets Peter mentioned are for Health & Safety monitoring and for individuals to monitor their own exposure. There is enough paranoia around on this issue that it might be a very popular retail product I suspect!
Comment: There is an enormous amount of hysteria over levels of air pollution in UK cities at present. This is particularly reflected in attacks on motor vehicles and schemes such as the Ultra Low Emission Zone (ULEZ) in London and planned Clean Air Zones (CAZ) in other cities have been justified on the grounds that there is a “public health crisis”. This is very far from the truth and these schemes can more likely be seen as an excuse to raise taxes. For more information on this subject you may care to read this report from the Alliance of British Drivers: https://www.freedomfordrivers.org/Air-Quality-and-Vehicles-The-Truth.pdf
Peter Harrison concluded his presentation by saying the company was putting effort into good corporate governance and he emphasised how important it was for investors to have trust in the management. He is definitely right in that regard. He thanked the shareholders for their continuing trust.
One last question of significance from attendees was on the question of share buy-backs (and the resolution to approve them which as usual I voted against). The Chairman said they would not be doing them and their major shareholders took the same view, i.e. dividends were their preference. Hence no doubt the special dividend that was recently paid as the company had substantial cash on the balance sheet.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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