Benitec: A Small RNAi Stock with Big Hopes

In a previous article, we provided a list of 7 publicly traded companies involved in the RNAi Therapeutics space. With the recent IPO of Mirna Therapeutics (NASDAQ:MIRN) and the Benitec listing ADR listing (NASDAQ:BNTC), we can now rebalance our original RNAi therapeutics portfolio for a total of 9 stocks as seen below:

RNAi_Portfolio

When creating this portfolio, we capped Alnylam (NASDAQ:ALNY) at 50% since it dwarfs all the other stocks by market cap. We also added Benitec (ASX:BLT), an Australian company that our readers were quick to point out, and which claims to have a commanding intellectual property portfolio in the RNAi space. As we can see above, the current market cap for Benitec places it at second smallest in the portfolio and about a third the size of recent RNAi IPO Mirna Therapeutics which we added as well.

Benitec hasn’t performed well having lost -53% in the last year. Here’s a look at the 5-year historical performance of Benitec shares on the ASX:

Benitec_Chart

This chart doesn’t look that different from the patterns of share price movement that you often see with OTC companies. Retail investors who bought shares after the spike are underwater, and looking for some validation as the stock continues to break new lows. The strong patent portfolio that Benitec is said to have is what investors continue to point to while the share price sinks. With the share price continuing to plummet, could this Company become an attractive acquisition candidate?

When looking at the Benitec financial reports and website collateral, you can see how extensively the Company details their intellectual property (IP) portfolio. Each patent is listed along with the countries for which the patent is protected. It’s not often that a company goes out of their way to provide that many details about their IP portfolio. In addition to an in-house pipeline, they also have licensed their technology to a number of other companies as seen below:

Benitec_Licensing_Partners

Benitec’s in-house program is a product candidate for Hepatitis C (TT-034) which is expected to release efficacy data in Q4 2015 and complete the Phase I/IIa trial by Q2 2017.

There are many professional biotech analysts studying the RNAi space because it has the potential to create alpha. These analysts do nothing but study this technology for a living, and are far more suited to identify the companies with the most likelihood of success. The scientists who develop this technology, also communicate to the business about how they feel their IP stacks up to the competition. If at any point Benitec’s IP was perceived as being “dominant” in the RNAi space, it would be easy enough for any company to acquire them for a relative pittance based on their current market cap of $48 million.

One company providing analyst coverage of Benitec is Shaw Stockbroking which provides a nice round price target of $3.00 per share for Benitec with a current price of .49 cents. Here’s a snippet from their financial projections:

Shaw_Benitec_Report

It’s not hard to imagine that a +4908% increase in revenues year-over-year would result in a +500% increase in share price, but how likely is it that these revenues will be realized? Is this a fair representation to retail investors of what potential Benitec has? It doesn’t seem that this number has any basis since the report fails to justify where this increase in revenues will come from. Benitec’s market maker, Maxim Group, also provides “analyst reports” with price targets in excess of +300% over the current price, then goes on to say:

Maxim_Group_Report

When investing in RNAi therapeutics, you don’t have to guess which company has the dominant IP position. If you invest in a portfolio that contains all publicly traded companies in this space, you’ll have exposure to all the possible IP and most importantly you’ll be diversified. If you want to overweight Benitec (NASDAQ:BNTC), you can give it a 50% position instead of Anlylam.

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6 thoughts on “Benitec: A Small RNAi Stock with Big Hopes

    1. James/Sam/Jimmy. We can see your IP address is the same for all 3 comments, and you are in fact the same person. If you really want to convince the investing community that Benitec is “the stock of the century”, that’s not the way you should go about it.

  1. Benitec’s single dose therapy which continues to produce the therapeutic within the cell rather than having to redose every week/month as other RNAI companies will be remarkable.
    Benitec’s only supposed failing is the length of its current hepC clinical trial. Yet this is a first in man, none withdrawable therapy and strict protocol must be followed. The data to soon flow will show how game changing this technology is

  2. Benitec has great technology. However, the ability of management to sell this to big pharma or large investors has been rather disappointing to say the least. Management better hope that efficacy in the current trial comes and comes quickly. The dosing delay in the past has left a bad taste in the mouths of investors, and the glacial dosing of this trial doesn’t help matters. Management needs a boost in value l, and this can only come through an efficacy announcement. Many are expecting efficacy of some kind with cohort 3 as listed on the progress chart, so let’s hope that this is not a promise management cannot keep.

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