[Update: Biota's Q1 FY10 royalty announcement - $331M AUD Relenza sales, indicative royalty of $24.1M* based on 1.8225 Fx rate.]

Relenza sales were £182 million reflecting continued orders from Governments for pandemic stockpiling. That’s around $23M in royalties for Biota.

• £45M in US
• £38 in Europe
• £99 RoW via GSK announcement

Royalties owing to Biota Holdings (BTA) from GSK’s Relenza sales of $24M,  narrowly beats consensus estimates.

Production increases on target for 190m by end of 2009.

Production Update and Rotacap/Rotahaler

In Q&A – very good run with Relenza, have increased capacity, running at 90M and will go well over 100M packs for next year. Lower price rotacap coming on stream soon which further increases capacity.

Where to From Here

First where have we been? It’s a year since I laid out the bull case for Biota . It’s been quite a ride.

Relenza Royalty History (GSK Quarters)

• Q2 09 Relenza sales were $122.5 million and indicative royalties were $8.9 million
• Q1 09 Relenza sales were $462 million and indicative royalties were $32.3 million
• 2008 Q4 $20.8M – 1.46M
• 2008 Q3 $27.1M -1.9M

Looking forward GSK won’t make 190M doses of Relenza to sit on their shelves. With the US stockpile recommendation of 50/50 Tamiflu/Relenza plus 60 other governments wanting Relenza, GSK will probably sell most of that 190M in 2010. 190M*$20AUD*.07=$266M in royalties on a EV of $436M. Hence the possibility of super spike into the high single digits. That is high target. With Rotacap selling for less actual royalties likely to be less.

Another possible super spike catalyst is LANI. A great upfront and royalty deal for LANI is the wild card at the moment. The deal provides Biota’s management a chance shine. I hope they do.

Remember WilsonHTM? Their royalties estimate for FY10 is $108M. With $23M and in the bag and the next three quarters all likely to be higher to substantially higher, there’s plenty of blue sky above that estimate.

Let me be clear. We’re out of value investing land now and into growth/speculation/momentum. At current prices there is downside risk.

GSK Q3 2009 Webcast Notes

Comments

Andrew Witty CEO

• 30% of sales from white pills Western markets highlights new diversity and reallocation of resources to key growth areas; emerging markets up 25%, consumer healthcare up 8% and vaccines.
• Geographic expansion continues.
• Japan big opportunity over next four years.
• Cost cutting continues. Guiding down on R&D costs due to higher efficiency.

Q&A

• 60 countries with stockpiling programs with split improving for Relenza. Expects steadier strong sales going forward.
• very good run with Relenza, have increased capacity, running at 90M and will go well over 100M packs for next year. Lower price rotacap coming on stream soon which further increases capacity.

2009 Q4 results and webcast are on 4 Feb 2010 My target range for royalties is $28M-35M.  20M doses sold * $20 * .07 = $28M

Note: * Actual payment based on Fx rate 30 April 2010.

Disclosure: Long Biota Holdings

Related posts:

1. Biota Relenza Royalties and Production Update Overnight
2. Biota Hits Ball Out of Park
3. Falling Knife: Biota Holdings Ltd. (BTA)
4. Biota’s Revenue Mix
5. Biota Holdings Limited (BTA.AX) Part 2
6. Biota Holdings Limited (BTA.AX)