Prometic Life Sciences Inc. (PLI.TO)

This has 2 different businesses. 1.) Manufacturing, their plasma base. 2.) Orphan drugs. Sees both sides of the business growing. Looks at the manufacturing as a “steady Eddie”, and it is really going to grow over the next few years. Have a number of companies they are currently selling plasma to, who are in different levels of clinical trials with the FDA. If some of these got approved, the amount of plasma needed will really ramp up. Also, 2 or 3 of their drugs could be fairly significant blockbusters that they may hold for cash flow or selloff. Has his eye on this.

There are 2 parts to the company. The one can take a bag of plasma and extract up to 14 proteins. This methodology is a lot cheaper and you can get a lot more of the protein, compared to the existing process. Just announced a 4^th orphan drug. His expectation is that they will announce 3 more before the end of the year. Also, have a drug called PBI 4050 which attacks fibrosis, which he thinks will be quite significant. He really likes the 2 year outlook for this company.

Did some trimming at $2.50. This is a story that could be $10. They have a drug that treats liver cirrhosis, which could be a complete home run. Also, have a plasma treatment plant in Québec. However, the company does not have much in the way of earnings yet. There is nothing wrong with this and it can possibly go to $3-$3.50.

Has very little insights as to what their business does. Because of this, he is very happy to stay on the sidelines. He doesn’t see what real insights we can have.

Thinks there is a lot of room for them on the “removal of plasma from blood” side of the business. There are a number of drug companies that are using their product, and if any of them are successful going from a small clinical trial to a mass market and selling into the market, they are going to need a lot of this company’s products. Also, this company has an orphan drugs side and there will be a number of different stages of different trials. If any one of those drugs were to be successful, it would dramatically change the profile of this company.

It is a component of the TSX healthcare index. It is a favourite of the street, but it may be overloved. He would not step in now as it has gone too far too fast. He suggests buying three or four in this group, not just one.

Just announced the concluded of their safety tries of their drug PB4050. Expect to start phase 2 trials in April. In 2016/17 the results of a protein extraction business should be significant.

He pared off half of his position. You can always come back into it. It looks like it might want to come back and find a level at around $2. He would be interested in buying more of this at around $2.

Never liked the story. They did a good job over the last little while. It was a long process. No revenue or earnings.

He originally bought this for what he considers their manufacturing business. They have a technology that allows them to remove plasma from blood. A lot of drug companies are using this in their drugs. As some of these drugs get approved, the amount of plasma they are selling will really ramp up. They have 2 or 3 orphan drugs that they are working on. There will probably be some interim results later this year on a couple of them.

Analysts have targets of $3-$3.50. Earnings estimates for the coming year is a loss of $0.03, so there is no E in a PE multiple. Have 2 core products. They can use their own technology to extract proteins from plasma in blood. Have applied for a variety of applications for “orphan” drugs, so that the existing method for the same protein being extracted from blood can be changed to their method which is a lot less expensive. Also, working on a drug for fibrosis. In the very early stages of testing and appears to work better than the existing gold standard. Combined with the gold standard, it works even better. Very early stage and speculative. Thinks they are finally going to have actual production and approval in 2015-2016.

Great company with a great science. He is a ROE oriented investor, but ROE gets linked to the price of the Book multiple. When he looks at the Canadian stock market with companies that have market caps greater than $300 million, the company with the highest price-to-book multiple in the entire Canadian market is this one here. Statistically, when you buy a stock on 25, 30 or 40 times price-to-book, there is a really good chance you are not going to be happy in a year’s time. 1 of 2 things are going to happen. They are either going to have to raise a ton of dough to backfill their business or people are going to look at it as a great company, but way ahead of itself. To him, this is the most expensive stock in Canada at 35 X Price-To-Book.

Whenever you look at charts, you start from the big picture and work your way down. This is a reasonably long chart. On the very big picture you’ve got an uptrend in place. This is defined by higher highs and higher lows. When a stock gets too high above its trend line, it often corrects. It doesn’t mean it’s the end of the world, but it does mean that if you don’t already own it, sometimes you’ll wait a little while for it to correct.

Stock tends to be very volatile and can have $.40-$.50 swings in the share price pretty routinely. If he didn’t own it, he would probably take a piece here, and would look to add another piece on either a pullback or any significant type of news. Just did a financing which is a great move from management’s perspective, in that now they shore up for all the trials they are going to do. Have a number of different orphan drugs. This $25 million plus the cash they have on hand, helps to really smooth things out. Their base plasma business revenue tends to be a little bit lumpy, as drug companies order from them and build their supplies up. If you don’t own, consider taking a position here and adding more on either a pullback or more positive news.

Stock has been on a tear. He originally got involved because of their manufacturing businesses. They manufacture plasma from blood, for different drug companies that are used in different drugs. Sees this business continually ramping up over the next few years. Have a number of drugs that are in clinical trials, and if they get approved then the sample size of the amount of plasma they are going to need is going to expand exponentially. Sort of a lottery ticket, because they also have some technologies for orphan drugs, and that is what has really caught the market’s attention. Just issued stock and raised $25 million. Expects there will be some kind of partnership agreement, which could bring in more cash to fund their trials. Going forward, he thinks the stock goes significantly higher. If you own, consider taking some profits and trade the stock. He likes it at the $1.90 level.