Anticipating Neptune's Big Bounce to Continue

Anticipating Neptune's Big Bounce to Continue 
LOS ANGELES, CA -- (Marketwire) -- 01/15/13 --  Neptune Technologies
& Bioresources (NASDAQ: NEPT) announced they will hold a conference
call on Thursday, January 17th at 4:30 EST. The reason given for the
call will be to discuss the third quarter ended November 30th and
provide the company an "opportunity" to give investors an update on
management post accident action plan to "resume operations and supply
customers."  
We note that management sees this call as an "opportunity," and we
expect that we will find management is making progress on their
action plan on most if not all fronts.  
In our December 19th, 2012 article on Neptune, "Smart Investors Spot
Profitable Upside in Neptune's Recovery Plan" we stated the Company
has ongoing value as a reaction to the precipitous fall in the stock
price, "The facts are simple; Neptune will have the Sherbrook up and
running in about six months. The Company should be able to maintain
supplies to customers and maintain revenues for a business segment
that has been profitable for 3 years. Neptune has valuable assets;
plenty of cash and the losses will be offset to some extent by
insurance further preserving shareholder value. When the plant
reopens, Neptune should be able to produce nearly as much in revenues
as the September quarter. The Company will have new manufacturing
partners, and there will be no constraints holding back Neptune from
growing as much as their marketing efforts will allow. Acasti Pharma
will be further along in its Phase II and preparing for its Phase
III." This quote gives us subjects to focus upon in the upcoming
call. We will go through each below.  
The first thing we will be looking for is how the rebuilding process
at the Sherbrooke plant is proceeding. We expect that the plant is
proceeding on schedule, although construction during the Canadian
Winter can be difficult. Along with the rebuilding update could be an
insurance update. Management has stated that they have property
insurance for around $20 million. Management also stated they have
Business Interruption Insurance that could offset some of their
losses due to the accident. One point that management probably will
not touch upon regarding the facility are the rumors that they did
not have proper permitting for the expansion as these rumors have
been proven false.  
More important will be an update regarding the Company's ability to
fulfill its customers' orders of Neptune Krill Oil (NKO) and maintain
revenue levels. We believe that there will be some falloff of
revenues in the quarterly announcement, but not nearly a drastic as
some might expect. The important fact to watch for is how the Company
has been able to secure product manufacturing and maintain reliable
delivery of product to customers without their own manufacturing
facility. Management has spoken in the past about establishing new
relationships with global manufacturing partners, and seeing them
come to fruition should give investors comfort that the Company will
be able to meet near-term product deliveries and grow long-term. As
we stated in the previous article, we expect the gross margins to be
well off in the quarter.  
We believe that Neptune will be able to leverage their new outsourced
manufacturing relationships to allow the company to grow more quickly
in the future by outsourcing the majority of their manufacturing
needs. With established manufacturing relationships, Neptune will not
have to continue to grow their own manufacturing capabilities. This
will save Neptune major capital expenditures in the future, as they
were planning to grow the Sherbrooke facility to 500,000kg/year by
2014. This third plant expansion, with an expected price tag of $5
million, may no longer be necessary. We do not expect management to
address this as it is our expectation of further manufacturing
expansion, which can help Neptune accelerate their growth over time.  
Lastly, we believe that management will give an update on the
pharmaceutical divisions. In December Acasti Pharma gave a positive
update on CaPre(R) that seemed to be disregarded by the investment
community. Acasti released interim data on its Phase II double
blinded, placebo controlled clinical study for CaPre(R). The data
showed a statistically significant 25% (p < 0.05) reduction in
triglycerides after eight weeks of treatment in 19 patients with
baseline triglyceride levels between 204 and 476mg/dl. CaPre(R) also
decreased Low Density Lipoprotein (LDL), Very Low Density Lipoprotein
(VLDL) and non-HDL lipids and increased High Density Lipoprotein
(HDL). An update on next steps and recent progress for Acasti would
be in line. Since the pharmaceutical divisions are seen to be major
value creators for the Company an update on the neurology division
should be included in the call.  
We stated in the last article, "We see a path for the Company to
again produce at the sales and margin levels of the September quarter
beginning in about six months, and it is possible for Neptune to
reclaim its lost value over the course of the next 12 months." When
we wrote the last article the stock was at $1.71/share; as of the
close on Friday December 11th, the stock price was $2.35 a rise of
over 35% in just under a month. If the news from the call is
positive, it is reasonable to conclude that the stock price can
return to its pre-accident levels which would be another 100% up from
here.  
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at: 
http://www.biomedreports.com/20130115119106/anticipating-neptunes-big-bounce-to-continue.html 
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