Thread by @OverView11

On 29th April, @niftygranmaster added #BetaDrugs to his portfolio. The first SME stock. He had posted on 24th about the potential of companies, working on cancer cure. Let’s now take a deeper look at Beta Drugs and review its growth potential

https://twitter.com/NiftyGranmaster/status/1519985573997715456

2/ The company’s growth has indeed taken off in FY22.

FY 2018 - Rs.50 Crores

FY 2019 - Rs.64 Crores

FY 2020 - Rs.90 Crores

FY 2021 - Rs.116 Crores

FY 2022 - Rs.183 Crores

Net profit in FY22 more than doubled to Rs.25Crore with EPS at Rs.26.

3/ Beta Drugs had fully acquired Adley Formulation Pvt Ltd (AFPL) and Adley Lab Ltd (ADL) resulting in backward integration of APIs & other raw materials. This has made key difference in its operating margins and revenues.

4)/ The Company is fully focused on Oncology drugs. 75% of the production is sold to major pharma companies & rebranded. Company sells 25% under its own brand in major cancer hospitals across India.

5/ The Company has an assured market and the demand is growing year on year. According to a recent CRISIL report (Feb 2022) “The growth momentum of the company is expected to continue with launch of new products and demand prospects of oncology drugs the company manufactures”

6/ While fast growth is assured based on the above, certain R&D activities that the company is engaged in, can result in massive transformation. Company is projecting launch of new products in the areas of NDDS, PARP, TKI & FTI from 2026 onward.

7/ How can these innovations transform the company and its fortune together with that of early investors? For this, we need to understand what these products are and what the impact would be on the company’s revenue

8/ NDDS (Novel Drug Delivery System): Company is working on developing new mechanisms for precise and targeted delivery & controlled release of cancer drugs to affected tissues & cells. Successful NDDS will catapult the company to the big league. It can be 100 times or much, more

9/ PARP Inhibitors: PARP (poly adenosine diphosphate-ribose polymerase) is a type of enzyme in human body which repairs damages to DNA in cells. PARP inhibitors stops the enzyme from repairing damage caused to cancer cells by drugs, resulting in their death

10/ TKIs (Tyrosine Kinase Inhibitors): TKs are enzymes which promote cell growth and division. In certain tumorous cancers, it would be necessary to control these enzymes to prevent them from helping cancer cells grow. TKIs does the precise function of inhibiting their activity

11/ FTIs (Farnesyl Transferase Inhibitors): In simple terms, a protein named RAs has been found to be abnormally active in cancer cells. It is found that by inhibiting protein Farnesyltransferase, the abnormality of RAs can be controlled. FTIs does the inhibition work

12/ If the company can produce the inhibitor drugs with very high quality & offer at better pricing, it can bring in, sizeable revenue This is apart from the tremendous potential of NDDS.

13/ A small company taking up the challenge of developing NDDS and the other drugs is no small matter. It shows Beta Drugs has the scientific talent pool, labs, process knowledge, cash and above all the dream to make this extraordinary effort.

14/ If things keep going as intended with the oncology R&D and release of new products into market, then even 100X could be gross understatement for Beta Drugs. The valuation of the company will zoom beyond imagination, if it pulls off its NDDS attempt

15/ Hope the study gives a deeper insight into the future growth plans of Beta Drugs. This is a pure technical study and NOT a recommendation to buy. Since it’s a SME stock, if things don’t figure out as expected, there can be risk of loss of capital.

16/ Acknowledge valuable inputs by Dr. Lokesh @lokesh848 & Dr. Jayakrishnan @Jayakri18460471