PEB - Pacific Edge Ltd

[MAC]

Moosie, I’ll offer you the benefit of the doubt as I’ve not yet decided if you are disingenuous or are just lacking any real effort to understand how companies work. Although, asking the same questions over again on the same thread would appear symptomatic to some I'm sure.

Biotechnology stocks have long lead periods prior to achieving profitability because they must, clinicians are very conservative folk and must be as our lives are in their hands. They require things like clinical trials, regulatory approvals and user programmes. All important and lengthy things that take time, up to a decade sometimes. Insurers also require assessments, both medical and commercial and must be similarly conservative and time consuming over it.

Whilst ticking off all these important things, a company like Pacific Edge may well sell a few tests in parallel but essentially they are still in a development phase.

Most biotech companies typically have an infinite P/S ratio, for up to a decade even, until they reach such time that they have entered into a commercialisation phase. Yet such companies still have a value, they have qualified people, assets, patents, IP, laboratories and most importantly potential.

A DCF is a fundamental analyst’s means of determining a company’s valuation by assessing that potential. A high potential company will have a higher valuation, a lower potential company will have a lower valuation.

Pacific Edge are few weeks into their first full commercial financial year and P/S ratios remain entirely meaningless at this time and probably will be meaningless right up until when profitability is achieved.

So to answer your question – no, couldn’t give a rats what knockers think about P/S ratios.

[couta1]

I am still waiting for holders of PEB to let me know if they are still comfortable holding a "sure-shot" stock with a PS ratio of over 400 in a market looking at a possie downturn? GEO was tracking at this level a mere few months ago and everyone was calling it lunacy. Why is "different this time" for PEB?

Even if the SP halved and sales tripled we'd still be looking at a PS ratio of 60...

I'd appreciate sane answers that do not have DCF out to a squillion years or "down-ramper" or "knocker" in their reply. (I have just stated simple facts here and am looking for simple answers thanks).

Cheers,

Moose

A simple answer from me is Yes I'm happy holding Peb regardless of current PS ratio and perhaps its time for another Warren Buffet quote. If you aren't comfortable holding a stock for 10 years then don't hold it for 10 minutes

[winner69]

Moosie,its not about valuation methodologies, DCFs, risk/reward ratios or whatever

Its all about belief - if you believe the story and that one day it plays out to expectations you will be richly rewarded. Nobody knows how big that reward is (with all due respect not even MAC). Keep holding while you have that belief, no matter the price on the day

Prices are just dots on a squiggly there for traders

You not convinced about the story - I wouldn't even worry about PEB then

[clip]

article in the NBR today states sales rose 63% to $838,000 while trading revenue almost tripled to $523,000 after it started selling CXbladder in US last july

Had that $838k sales been stated by pacific edge previously? Don't recall seeing it but i haven't been keeping track of this thread for a while, see attached screenshot of nbr articleAttachment 6001

[moadoc]

I quote from Snapiti "I believe most retail investors have no idea of the politics and protectionism go it alone companies face in the US pharmaceutical industry"
Assuming this is true (which I have no doubt it is) then I see the the announcement to sell kits online as a good move. Why?- While I don't think it will amount to a huge increase in sales, it will get the PEB name across to a wider audience through google searches and TV/radio advertising. This is something the established players are not doing, and to crack any sort of protectionism, going direct to the end user is a good thing. I am not going to assume sales are low and therefore PEB is getting desperate ( it is possible, but why jump to negative conclusions all the time). Rather I see it as forward thinking, where doing something outside the square is just adding to the push for sales. Others have commented about internet sales opening up an avenue for litigation. I would imagine this area has been well and truly looked into by PEB, as management are not exactly novices.

[Whipmoney]

I am still waiting for holders of PEB to let me know if they are still comfortable holding a "sure-shot" stock with a PS ratio of over 400 in a market looking at a possie downturn? GEO was tracking at this level a mere few months ago and everyone was calling it lunacy. Why is "different this time" for PEB?

Even if the SP halved and sales tripled we'd still be looking at a PS ratio of 60...

I'd appreciate sane answers that do not have DCF out to a squillion years or "down-ramper" or "knocker" in their reply. (I have just stated simple facts here and am looking for simple answers thanks).

Moose

Moosie, whilst I can't specifically remember your stance on this stock a few months back when it was pushing over $1.40 I do recall that I raised the issue that the stock had a Price/Sales ratio of over 37,000x. Obviously that was a function of very low sales (around 3 units to be precise) however it was still somewhat concerning that the market had priced in such a high level of growth from a base of near 0.

Its interesting that you've raise the P/S equation now, and whilst I haven't done the maths I must say that a P/S of 400 is actually relatively good for an early stage biotech with good growth prospects and a large addressable market.

Admittedly, the P/S ratio is a very crude measure of value however it is a useful quick and dirty tool to measure whether the market has ascribed too much value to a particular stock.

For example a very similar US based biotech company had a P/S Ratio of 2,400+ in Year 1. By Year 3 this was only 291x and the stock had appreciated by 51%. By Year 8 the stock had appreciated by 174% (cumulatively) which isn't a bad return when you bear in mind that there were likely significant swings in each of those years so you could potentially buy a lot lower and sell a lot higher, allowing for a return of 200%+.

What this does show is that when PEB shot from 50c to 1.60+ in a matter of weeks/months (on the back of a few announcements), then this was a good indication that the market had gone ballistic and lost its senses.

The stocks come back to (or towards) reality since then and is a lot more sensibly priced. Whether its over or under valued is a hard question but I think either way this is a binary outcome stock.

Either PEB succeeds and gains a lot more value or it fails miserably and heads to zero. I don't think anybody on this board can accurately predict (with 100% certainty) where she'll end up so I hope all bets are placed accordingly.

[MAC]

Let’s see in time Moosie, it’s a complex sector and company for all of us, and I think Pacific Edge are doing the right thing by engaging those international market researchers and analysts to work up an open valuation.

The top 100 holders are mostly long term and seem really very stable, it seems to be the small recent holders that are unsure, and perhaps these reports will provide them with a summary of the information the larger investors already have and have been content with for some time.

[Schrodinger]

Moosie, whilst I can't specifically remember your stance on this stock a few months back when it was pushing over $1.40 I do recall that I raised the issue that the stock had a Price/Sales ratio of over 37,000x. Obviously that was a function of very low sales (around 3 units to be precise) however it was still somewhat concerning that the market had priced in such a high level of growth from a base of near 0.

Its interesting that you've raise the P/S equation now, and whilst I haven't done the maths I must say that a P/S of 400 is actually relatively good for an early stage biotech with good growth prospects and a large addressable market.

Admittedly, the P/S ratio is a very crude measure of value however it is a useful quick and dirty tool to measure whether the market has ascribed too much value to a particular stock.

For example a very similar US based biotech company had a P/S Ratio of 2,400+ in Year 1. By Year 3 this was only 291x and the stock had appreciated by 51%. By Year 8 the stock had appreciated by 174% (cumulatively) which isn't a bad return when you bear in mind that there were likely significant swings in each of those years so you could potentially buy a lot lower and sell a lot higher, allowing for a return of 200%+.

What this does show is that when PEB shot from 50c to 1.60+ in a matter of weeks/months (on the back of a few announcements), then this was a good indication that the market had gone ballistic and lost its senses.

The stocks come back to (or towards) reality since then and is a lot more sensibly priced. Whether its over or under valued is a hard question but I think either way this is a binary outcome stock.

Either PEB succeeds and gains a lot more value or it fails miserably and heads to zero. I don't think anybody on this board can accurately predict (with 100% certainty) where she'll end up so I hope all bets are placed accordingly.

This is a good post. Assuming that the company has capable management I do think they have more options than the USA or bust strategy. PEB can build a successful company in other markets and they should of had contingency plans if the Amercians play too rough.

I do think this is not a $10 or $0 if they are pragmatic and not arrogant that all they have to do is turn up in the USA and they will win the market. I would of prefer them to focus on NZ/Aust etc and prove the business model but there is also nothing wrong with thinking more big bang and taking on the USA.

What they really need for the big bang theory is a very good management team and lots of friends (investors/directors/government/regulators) with very strong USA connections.

I havent seen anyrthing yet from PEB that makes me think they have the required support in the USA. Other countries would be preferable but the PEB business model does require labs which in turn costs lots of money. Because of this factor and the millions poured into the USA at the moment it is a USA or bust strategy. They dont have a plan B without asking for another $20M to enter into other countires.

Are there investors out there that are willing to back this current team in another country?

[barney]

http://www.odt.co.nz/news/business/3...iagnostic-tool

[psychic]

It would seem that no explanation is necessary as you have succinctly hit the nail on the head.

So an NPV of 97% means that for every 100 people for whom the test result is negative then 97 do not have cancer and 3 do.

A PPV of 47% means that for every 100 people for whom the test is positive then 47 do have cancer and 53 do not.

A negative result is more definitive than a positive one.

NPV/PPV are dependent upon both the Sensitivity/Specificity of the test AND the prevalence of the thing you are testing for amongst those tested:
Attachment 5999
Same test - different prevalence.

The figures that PEB are promoting are 'unique' to that study - based on that sample of patients. The real world may turn out to be a little different. You probably do not want to talk confidence intervals - but that comes into it as well.

What CxBladder is, is better than any other non-invasive test.

Best Wishes
Paper Tiger

Many thanks.

The issue of the results quoted being unique to the study is really something of a nuisance. But I guess that if PEB had found further validation as being necessary for uptake in the US (or Europe for that matter), then it would have instigated this by now?

Here is a viewpoint on current biomarkers:

http://www.emagcloud.com/insoftdigit...dex.html#/110/

Cxbladder is mentioned page 106. The sensitivity quoted puzzles me but I don't have a copy of the O'Sullivan et al paper to see where they get this from.

Rather than thinking that world domination is the objective and that it is an all or nothing sort of deal, I'm starting to understand that Cxbladder will be used as part of a wider process based on its specific clinical advantages. I hope.