Rapid Growth of Biologics Industry Puts CROs (Contract Research Organizations) in Very High Demand …
Little-Known ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) Saw Its Revenue Rise 106%[1] in 2018
& It’s Expected to Now Earn Over $16.6 Million This Year[2]
There’s an exciting shift occurring in the pharmaceutical industry – one that anyone considering investing in this market needs to know about. 
Here’s the deal: the industry is swiftly moving from chemical therapies to biologics — which include a wide range of products such as vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues, and recombinant therapeutic proteins.
Biologics are manufactured by living cells and produced using recombinant DNA technology. This process stands in stark contrast to how chemical therapies, or small molecule drugs, are produced, which is through organic or inorganic chemical synthesis. Biologics are made of sugars, proteins and nucleic acids.
One significant trend that has emerged from biologics’ rapid growth is the trend of large organizations to outsource development to contract research organizations (CROs) – like currently “under the radar” ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF).
In fact, ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) has already signed multiple partnership deals with Big Pharma companies.[3]
More specifically, ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) is standing out in a grossly underserved antibody discovery CRO segment that today is worth over US$100 billion[4] and which is projected to grow to US$125 billion by 2020[5].
Thanks in large part to its “B cell capabilities,” ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) has established itself as the first full-service discovery antibody CRO in North America or Europe to provide a globally-operating, full pipeline of therapeutic discovery offerings from target selection, on-site animal access, advanced hybridoma discovery, B cell screening and sequencing, antibody characterization, phage display, in vitro and in vivo analyses.
The company has also already built an impressive international presence with operations in the USA, Canada and the European Union.
“We’ve seen very strong interest in our diverse line of development platforms from a number of leading global pharmaceutical and biotech companies.” – Jennifer Bath, Ph.D., CEO and President of ImmunoPrecise Antibodies.
One big reason for ImmunoPrecise Antibodies (TSX.V:IPA) (OTC:IPATF) growth is its ability to house a comprehensive suite of services spanning concept to pre-clinical trials. In other words, it has become an extremely rare one-stop-shop option for big pharma companies.
That one-stop-shop approach combined with a rapidly expanding niche market that is expected to grow at three times the rate of the broader CRO market has put ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) in an excellent position to expand and boost its earnings.
Cutting Edge, Full Service Therapeutic Drug Developer
Helping to Usher in a New Age in Medicine!
Advances in biologics are allowing pharmaceutical companies to provide treatment therapies according to a patient’s individual characteristics, needs, preferences and genetic makeup. In light of this it’s no wonder that according to a survey by the Tufts Center – 94% of pharmaceutical companies have invested in this form of medicine[6].
But with the way the market is today those companies wouldn’t be able to deliver targeted biological therapy (biologics) without CROs like ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF). Discoveries and developments made in IPA’s labs are literally pushing the market forward.
And this shift toward biologics is fueling global growth in pharmaceuticals market, which is now expected to post a 5.8% CAGR. The global pharmaceuticals market was worth US$934.8 billion in 2017, and is projected to reach US$1.17 trillion by 2021[7].
It’s also notable that today’s largest pharmaceutical drugs market, North America, is worth US$341.1 billion[8].
In addition, keep this in mind: the US drug industry spends about $45 billion annually on “R&D”[9]. Now consider this: For the biologics portion of the sector alone, outsourcing of research is projected to reach $87.6 billion by 2027.[10]
Clearly, the pharmaceutical industry is changing and creating new growth opportunities and one of the companies that is positioned to remain at the forefront of that change is ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF).
Already, some of the world’s top-selling drugs are biologic therapies. The top selling biologic in 2018 was Humira. Genentech’s biologic drug Rituxan, a lucrative anti-cancer drug used in the treatment of Non-Hodgkin’s lymphoma, received FDA approval in 1997[11] and it is still making big profits for Genentech.
A quick look at the drug market today shows that 5 out of the top 10 drugs are now biologics[12].
|
Company |
Drug |
Symbol |
Market Cap |
Share Price |
|
AbbVie Inc. |
Humira |
NYSE: ABBV |
$119.98 B |
81.34 |
|
UCB SA |
Cimzia |
EBR: UCB |
$14.75 B EUR |
75.86 EUR |
|
Johnson & Johnson |
Remicade, Stelara, Simponi |
NYSE: JNJ |
$366.40 B |
137.6 |
As you can see, these industry giants are dominating the space and turning a large profit once their drugs hit the market. The potentially large returns are at a grasp for smaller pharma companies when bringing new prescription drugs to the market, especially a company like ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) with their one-stop-shop approach.
The fact that this niche has slipped under the radar of over 90% of the CROs in operation is astounding—especially given that therapeutic antibodies represent the largest class of biopharmaceutical products on the market are valued at over US$100 billion, and are projected to grow to US$125 billion by 2020.[13]
|
Company |
*Market Cap (USD) |
*Price
|
*EV |
*EV/Sales |
*EV/EBITDA |
|
2019 E |
2019 E |
||||
|
ImmunoPrecise Antibodies Ltd. |
$34M |
$0.50 |
27 |
1.1x |
13.3x |
|
Genscript Biotech Corp (OTCMKTS: GNNSF) |
$2,887M |
$1.57 |
2,426 |
9.3x |
53.5x |
|
Syngene International Ltd. |
$1,549M |
$7.74 |
1,572 |
5.7x |
17.9x |
|
WuXi AppTec Co Ltd. |
$12,233M |
$11.67 |
12,252 |
7.2x |
23.3x |
*All numbers presented in the table above are from December, 2018**All value calculations in US$MMs unless otherwise stated***Source: Cormark Securities Inc., Thomson Reuters Eikon[14] |
|||||
To understand where ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) stands in the market, the chart above shows how the company compares to others in the market. While ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) is possibly the only single-source antibody discovery CRO out there, the chart above lists a few niche drug discovery CROs most similar to IPA.
Perhaps the closest comparable in the list is China-based WuXi AppTec Co Ltd. (HKG: 2269), given that it is the only other company with full-service offerings like ImmunoPrecise’s. Aside from IPA, no other Western CRO provides a one-stop-shop offering.
Compared to others in the space, ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) has a considerably low EV/Sales and EV/EBITDA estimate for the year 2019 compared to its closest competitors. A lower enterprise-value-to-EBITDA (EV/sales) ratio means that a company is believed to be more attractive or undervalued.
ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) top competitors have an EV/Sales that is 5 to 9 times higher and up to 4 times higher EV/EBITDA ratios with their market capitalization close to BILLIONS!
The only other full-service CRO similar to ImmunoPrecise, WuXi AppTec Co Ltd. (HKG: 2269) with a marketcap of @12,233M is expected to have an EV/Sales ratio of 7.2x, with an estimated EV/EBITDA of 23.3x in 2019. Meanwhile, Genscript Biotech Corp (OTCMKTS: GNNSF) with a market cap of $2,887M is expected to have an EV/Sales ratio of 9.3x, with an estimated EV/EBITDA of a whopping 53.5x in 2019.
Typically, the EV/Sales ratio is between 1 to 3. Similarly, the lower the enterprise-value-to-EBITDA ratio (EV/EBITDA), the more undervalued the company. While the enterprise-value-to-EBITDA ratio varies by industry, the EV/EBITDA for the S&P 500 typically averages from 11 to 14.
ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) has seen an increase in revenue of 106%[15] in 2018. And according to a research report from Cormark, the company is expected to have revenues of CAD$16.6 million in fiscal 2019—more than triple its fiscal 2018[16].
The same report expects gross revenue of CAD$31.9 million in fiscal 2020, with a gross profit of CAD$19.48 million.
Source: Cormark Securities Inc., Thomson Reuters Eikon
Discovering the Keys to Cancer Research?
There is an increasing prevalence of cancer and other chronic diseases in the world today. This has driven the growth of the Global Monoclonal Antibodies market, which ImmunoPrecise 
Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) is targeting through its efforts.
This market was US$95.1 billion in 2017, and is estimated to reach US$131.33 by 2023, with an impressive 5.53% CAGR during that period.[17]
Already, ImmunoPrecise has received a subcontract from Leidos Biomedical Research, Inc., which currently operates the Frederick National Laboratory for Cancer Research for the National Cancer Institute (NCI). Under the subcontract, IPA will discover and produce rabbit monoclonal antibodies using its proprietary B-Cell Select platform.
Acquisitions Targeting Innovative Technologies
ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) is leveraging multi-billion dollar clients with acquisitions in North America (Victoria, Canada, and North Dakota, USA) and Europe (Utrecht & Oss, Netherlands). It’s a Canadian company now operating from the US, with an office in Boston. By positioning itself as a transcontinental company, this allows ImmunoPrecise to service clients from a project’s beginning to completion, across both North America and Europe.
The company has more than 200 clients and has already announced an agreement with an undisclosed, top 15, global pharmaceutical company, to discover novel antibodies using ImmunoPrecise’s proprietary hybridoma technology.
Excellent Management Team Driving Development
Getting ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) to its current stage has involved a series of milestones, driven by developments, personnel changes, and significant acquisitions.
Here’s a quick look at ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) world class management team that’s orchestrating the company’s latest moves:
Since Dr. Jennifer Bath took the helm over a year ago, ImmunoPrecise has successfully shifted into gear to fill a niche that the rest of the CRO community was missing out on. When she was appointed President and CEO of ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) in February 2018, Dr. Jennifer Bath wasted no time in repositioning the company in the marketplace. Witnessed during her over 15 years in the biopharmaceutical industry, Dr. Bath identified the market’s void for a comprehensive end-to-end CRO. Prior to joining ImmunoPrecise, Dr. Bath served as the Global Director of Client Relations at Aldevron, LLC. While there, she successfully headed the global sales and client relations teams, breaking year-over-year sales and revenue gains records. She began her career in academia, moving into industry after a 15-year appointment as Associate Professor of Cellular and Molecular Biology at Concordia College. There, she founded the Concordia College Global Vaccine Institute, and serves as the institution’s Executive Director. Dr. Bath earned her Ph.D. in Cellular and Molecular biology from North Dakota State University.
![](https://microsmallcap.com/wp-content/uploads/sites/2/2019/03/image016.jpg")
Serving as Chairman of the Board is Dr. James Kuo, has experience in the life science industry as a Chief Executive Officer, business development executive, and venture capitalist. Most recently, he served as Chairman and Chief Executive Officer of Synthetic Biologics, a publicly-traded biotech company. While there, two financings and a collaboration with a European pharmaceutical company were completed. Synthetic’s stock went from $0.82 to $2.30 during his tenure as CEO. Dr. Kuo has also served as Chairman and Chief Executive Officer of BioMicro Systems. The company received several rounds of venture financing, achieved several million dollars in sales of an internally developed instrument for microarray research, and was eventually sold to a major European pharmaceutical company. Dr. Kuo has further served as the Chief Executive Officer of Discovery Laboratories, a publicly-traded company developing surfactant-based respiratory therapeutics. Dr. Kuo has been Associate Director of Licensing and Development at Pfizer and Vice President of Business Development at Myriad Genetics. He has also been Managing Director of HealthCare Ventures, a $378 million venture capital fund. He received his MD from the University of Pennsylvania School of Medicine and his MBA from the Wharton School of Business. He received his BA in molecular biology from Haverford College.
Why Investors Should Watch ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF)
Big Pharma and Biotech Boom:
Drug discovery lacks presence among the top CROs, despite being the largest segment of outsourced R&D spend, at a very healthy 33%. ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) is targeting an anomaly within big pharma’s massive outsourced R&D budgets, within a grossly underserved antibody discovery CRO segment today worth over US$100 billion, and projected to grow to US$125 billion by 2020. Outsourcing of research for biologics is projected to reach $87.6 billion by 2027. In the US, R&D spending on drug discovery is a $45 billion market.
Significantly Aiding Cancer Research:
Targeted therapies, like those whose development is being significantly aided by the work of ImmunoPrecise are currently the focus of much anti-cancer drug development, in particular the monoclonal antibody custom service market, which is expected to grow at a 10.84% CAGR during the forecast period of 2017-2023. ImmunoPrecise has already been subcontracted by the Frederick Cancer Institute—National Cancer Institute (NCI) for five years to discover and produce rabbit monoclonal antibodies using its proprietary B-Cell Select platform.
Fully Funded to Target Global Antibody Market:
Through a recent fundraising that was oversubscribed to the tune of CAD$9.1 million, the company is fully funded to continue acquisitions and development. The company has also seen its annual revenue increase by 106% in 2018, and is projected to triple its revenue in 2019. When including its European operations, ImmunoPrecise has plenty of global clients (200+). Now with a footprint in the huge biotech hub of Boston, ImmunoPrecise expects to increase its B-Cell and Phage display sales moving forward.
High-Tech, Highly Efficient Tech Increasing Probability for Discoveries:
By perfecting a technique to circumvent the common issue of its competitors involving the survival rate of antibody-producing cells, the company has tapped into an industry advantage that’s faster, lower cost, and lower risk. ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) offers a myriad of options by which to solve the pharmaceutical industry’s most complex requests. The company has already signed deals with the National Cancer Institute and with a Top 15 global pharmaceutical company. The platform is primed to attract several Top 10 big pharma companies..
Team of Experts Capable of Scaling Globally:
Led by President and CEO, Dr. Jennifer Bath, who identified a market need for a comprehensive end-to-end CRO, the ImmunoPrecise Antibodies Ltd. (TSX.V:IPA) (OTC:IPATF) team is built upon strong minds within the industry. Founder and Chairman of the Board, Dr. James Kuo, also brings invaluable industry experience with a history that includes multiple C-level roles, and managing experience at pharmaceutical companies including Pfizer. Overseeing the company’s financial and strategic management is Chief Financial Officer, Lisa Helbling, who brings over 30 years of experience, and currently serves on the Board of Directors for Healthy Dakota Mutual Holdings and Blue Cross Blue Shield of North Dakota and is the Chair of the Audit & Compliance Committees.
