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MJLB (Ultrack Systems) Major Run on EV (electric vehicle) Tracking Pioneer As Company Prepares for ELD Product Launch
Published
4 years agoon
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Boe Rimes![](https://microcapdaily.com/wp-content/uploads/2021/02/asd.jpg)
MJLB (Ultrack Systems) is on a wild run up the charts in recent months skyrocketing out of the triple zeros to recent highs of $0.26 per share. The stock has been under heavy accumulation recently and volume has picked up substantially with MJLB regularly trading over US $1 million in dollar volume per day. MJLB started moving last year, moving up off the triple zeroes and moving northbound as a new era of penny stock speculators fueled by robinhood and its 100 million new trading accounts take on the bulletin boards. These are different times than just a few short years ago; now penny stocks such as TSNP can achieve a $6 billion plus market valuation and trade $375 million in dollar volume in a day on the bulletin boards. And compared to TSNP, MJLB is truly a shining light of a Company with a real business and multi-national global corporations as customers.
The time could not be better for MJLB to make a real powerhouse move to a whole new dimension like so many other penny stocks are these days especially in the EV space. We have been reporting on ABML huge rise. These are exciting times for Ultrack Systems, an early pioneer in the EV space currently readying the launch of its new ELD product in 2021 in partnership with major corporations that management expects will take the trucking industry by storm. As we reported earlier on MJLB when the stock was sub $0.02 the Company already has a number of big-name clients; MJLB successfully integrated its tracking solutions into EV vehicles such as the BMW i8 and all Tesla models. Dealership and leasing clients of Ultrack have increased their EV fleets inventory over the last 5 years and exclusively use MJLB tracking platform for their BMW i8 and Tesla models. MJLB also consummated a business partnership with TELUS one of the biggest telecoms in north America with a $25 billion market valuation trading on the NYS and Canadian TSX Exchange under the symbol T. More recently MJLB inked two new deals for Ultrack’s products and services to be used by two high-end car rental companies. These car rental companies represent brand new clients for Ultrack and immediately helps the Company to achieve deeper penetration into the enormous car rental/leasing space. MJLB has been working hard behind the scenes recently securing a debt reduction of $105,150.00 representing approximately 65% removal of the entirety of this debt from off Company books for Q1, 2021. As of the last Q MJLB has just $171k in total liabilities an incredibly low number. The Company has also recently successfully completed the process of retiring 100,000,000 shares that are currently issued and considered “outstanding” with its corporate share structure. After completing this substantial reduction, the new current Outstanding Share total is approximately 275m. Management states it will continue to look at options as the year progresses including possibly reducing more outstanding shares or whether a share buyback and or dividend makes more sense.
MJLB (Ultrack Systems) operating out of Concord, and Vaughan, Ontario Canada is a publicly traded company listed on the OTC bulletin boards. Ultrack Systems Inc., is a provider of GPS tracking solutions that develops, implements, and distributes electronic monitoring and tracking systems for companies in leasing, transportation, construction, disposal, and many other service driven industries. The Company’s platform; Utrack includes live tracking, reports, and alerts on a web-based platform. Ultrack Systems mission is to provide the best fleet tracking, reporting systems and its commitment to service. The Company plans to launch a new ELD product in 2021 in partnership with major corporations that will take the trucking industry by storm.
MIcrocapdaily reported on MJLB on December 8 when the stock was sub $0.02 stating: “Ultrack Systems Inc (OTCMKTS: MJLB) is making an explosive move up the charts in recent days as its global tracking solutions gain serious traction. The Company has successfully integrated its tracking solutions into EV vehicles such as the BMW i8 and all Tesla models. Dealership and leasing clients of Ultrack have increased their EV fleets inventory over the last 5 years and exclusively use MJLB tracking platform for their BMW i8 and Tesla models. Ultrack is preparing to expand further into the EV market in 2021 by updating its platform with specific features related to the EV sector which was worth $162 billion last year and growing fast. MJLB also recently consummated a business partnership with TELUS one of the biggest telecoms in north America with a $25 billion market valuation trading on the NYS and Canadian TSX Exchange under the symbol T. These are very big events for a microcap stock with just 350 million shares outstanding that are rapidly being accumulated by investors.
TELUS has been a really happy customer of MJLB recently commenting on the partnership: “Since the TELUS partnership began, Ultrack has implemented a non-disruptive, phased deployment approach throughout the pandemic to its entire customer base, including all of North America and Mexico. This strategy has been beneficial within the last half of the 2020 calendar year as most of their clients are in the transportation and logistics business and are deemed essential workers.
MJLB has is almost debt free and management seems committed to increasing shareholder value. Recently the Company reached a decisive and favorable settlement with its key funder for a substantial debt reduction of $105,150.00 representing approximately 65% removal of the entirety of this debt from off Company books for Q1, 2021. As of the last Q MJLB has just $171k in total liabilities an incredibly low number on the bulletin boards where most companies have millions in debt and many haver over $10 million in debt.
Earlier this month Ultrack Systems reported it has successfully completed the process of retiring 100,000,000 shares that are currently issued and considered “outstanding” with its corporate share structure. After completing this substantial reduction, the new current Outstanding Share total is approximately 275m. The 100,000,000 common share reductions are in keeping with management’s commitment to shareholders to growing this Company and adding value wherever possible. Management states it will continue to look at options as the year progresses including possibly reducing more outstanding shares or whether a share buyback and or dividend makes more sense.
In our previous report on MJLB we outlined the Company’s development of its J1939 CANBUS Device. The J1939 is developed to provide the most complete and comprehensive list of vehicle information available at the click of a mouse. The Company is not aware of any other single product that provides as much real-time data to vehicle fleet managers as the upcoming J1939. The Ultrack J1939 CANBUS Device was developed for transport that does not require Electronic Logging Device (ELD) but would benefit from the comprehensive engine and overall vehicle data that it provides.
We also covered the newly consummated business partnership between TELUS and Ultrack Systems. TELUS currently trades under the ticker symbol TU on the New York Stock Exchange and has a market capitalization of approximately $25 billion USD as of December 2020. TELUS company stock also trades on the Canadian TSX Exchange under the symbol T. TELUS has been working closely with Ultrack, focusing on developing systems and processes that took their multiple pricing plans and billing requirements, product roadmap, and hardware and software integrations into consideration.
Investor sentiment for MJLB is very high:
https://twitter.com/AlexandraHovor/status/1359166975268827144
https://twitter.com/TradeOfThoughts/status/1361016847252996104
— Pennies2Riches 🌐 (@GeniusTrader777) February 14, 2021
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There seems to have been some shorting primarily by Citi is using GTSM and CDEL. This seems like a dumb course indeed considering MJLB’s global clients such as TELUS, BMW and Tesla as well as the coming launch of the Company’s new ELD product this could rapidly turn into a massive short covering rally.
MJLB has been making big moves; in January the Company reported it has entered into contractual agreement with both Kore Wireless and Iridium Satellite in a strategic effort to expand Ultrack services worldwide. Ultrack renegotiated an existing Kore Wireless contract that further opens up Ultrack’s coverage to an additional 180 countries worldwide. Leveraging the power of in-vehicle video analytics, Electronic Logging Device (ELD) functionality, and location-based services in order to deliver deep insights to fleet managers.
Iridium Satellite (NASDAQ: IRDM) is the world’s only truly global mobile satellite communications company. With a reliable global network, Iridium powers new and innovative opportunities through industry-leading core technology and an ecosystem of partners with expertise in virtually every market. Iridium valued at over $5 billion did $560 million in revenues last year. Iridium Satellite targets areas in which cellular service is limited or non-existent but where the need for corporate connectivity is still essential allowing Ultrack products and services to be effectively used in areas with very remote coverage zones worldwide such as isolated oil pipelines and throughout major ocean ways.
On February 11 MJLB announced the Company has secured two new contracts for Ultrack’s products and services to be used in two fleets of high-end car rental companies. Additionally, the Company is now in the final phase before the official launch of Ultrack’s new ELD product and substantial hurdles have been cleared successfully. In early February, the Company inked two new deals for Ultrack’s products and services to be used by two high-end car rental companies. These car rental companies represent brand new clients for Ultrack and immediately helps the Company to achieve deeper penetration into the car rental/leasing niche, which happens to be vast.
The global car rental market size was valued at $92.92 billion in 2019 and is projected to reach $214.04 billion by 2027, registering a CAGR of 10.7% from 2020 to 2027. North America accounted for the highest share in the global car rental market in 2019, in terms of revenue, and LAMEA is anticipated to exhibit remarkable growth rate during the forecast period.
Recently management reported the Company has begun the testing phase of the Company’s new ELD product and anticipates certification by March. This new ELD product integrally partners with TELUS $TU and Iridium Satellite $IRDM. These partnerships provide potential for exponential growth once the new ELD device becomes officially available for our current customer base as well as new clientele.
The ELD is rapidly becoming a required component across international jurisdictions as countries like the USA and Canada have begun to mandate that commercial fleets be outfitted with the devices to electronically log driving hours, engine data and other compliance specifications. The ELD market is booming accordingly and the Company is strategically positioned to take advantage of this rapidly expanding market with top-of-the-line components and the industry’s most robust software. Any US carrier entering Canada will need to be using certified hardware and the hardware they are currently using will need to be certified by the 3rd party certification company for Canadian roadways. Which will put Ultrack in a very good position for US market sales.
Ultrack Systems recently stated they are in talks with two entities (one company and one government) that represent massive fleets of vehicles keenly interested in Ultrack’s new ELD product. These companies have provided a positive verbal commitment to come online with Ultrack’s new ELD once the ELD approval process is completed.
MJLB is an early pioneer in the EV market valued at $162.34 billion in 2019, and projected to reach $802.81 billion by 2027, registering a CAGR of 22.6%. Asia-Pacific was the highest revenue contributor, accounting for $84.84 billion in 2019. North America is estimated to reach $194.20 billion by 2027, at a significant CAGR of 27.5%.
Ultrack CEO Michael Marsbergen enthusiastically commented: “Ultrack’s new ELD product will be submitted at the end of February for the approval process by regulators and once approved, our new ELD product will be an industry disruptor. Our device is faster, longer ranged, has more robust infrastructure, more security, and ultimately provides far more comprehensive real-time and logged data to the end-user than anything currently available. Reaching the finish line on our new ELD device will catapult Ultrack into a new tier of revenue and industry recognition. I feel like the past 14 years of business is leading up to this point: all of our technology that we’ve built upon, all of the strong industry relationships we’ve grown, all of our strategic partnerships with multi-billion-dollar corporations like Telus and Iridium Communications. I believe that Ultrack’s new ELD is going to become the new trucking industry standard at some point in 2021-2022.”
$MJLB The importance of ELDhttps://t.co/S7FFAIYyoy
— Merkl Fernball (@MerklFernball) February 11, 2021
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MJLB is on a wild run up the charts in recent months skyrocketing out of the triple zeros to recent highs of $0.26 per share. The stock has been under heavy accumulation recently and volume has picked up substantially with MJLB regularly trading over US $1 million in dollar volume per day. MJLB started moving last year, moving up off the triple zeroes and moving northbound as a new era of penny stock speculators fueled by robinhood and its 100 million new trading accounts take on the bulletin boards. These are different times than just a few short years ago; now penny stocks such as TSNP can achieve a $6 billion plus market valuation and trade $375 million in dollar volume in a day on the bulletin boards. And compared to TSNP, MJLB is truly a shining light of a Company with a real business and multi-national global corporations as customers. The time could not be better for MJLB to make a real powerhouse move to a whole new dimension like so many other penny stocks are these days especially in the EV sector stocks such as ABML. These are exciting times for Ultrack Systems, an early pioneer in the EV space currently readying the launch of its new ELD product in 2021 in partnership with major corporations that management expects will take the trucking industry by storm. As we reported earlier on MJLB when the stock was sub $0.02 the Company already has a number of big-name clients; MJLB successfully integrated its tracking solutions into EV vehicles such as the BMW i8 and all Tesla models. Dealership and leasing clients of Ultrack have increased their EV fleets inventory over the last 5 years and exclusively use MJLB tracking platform for their BMW i8 and Tesla models. MJLB also consummated a business partnership with TELUS one of the biggest telecoms in north America with a $25 billion market valuation trading on the NYS and Canadian TSX Exchange under the symbol T. More recently MJLB inked two new deals for Ultrack’s products and services to be used by two high-end car rental companies. These car rental companies represent brand new clients for Ultrack and immediately helps the Company to achieve deeper penetration into the enormous car rental/leasing space. MJLB has been working hard behind the scenes recently securing a debt reduction of $105,150.00 representing approximately 65% removal of the entirety of this debt from off Company books for Q1, 2021. As of the last Q MJLB has just $171k in total liabilities an incredibly low number. The Company has also recently successfully completed the process of retiring 100,000,000 shares that are currently issued and considered “outstanding” with its corporate share structure. After completing this substantial reduction, the new current Outstanding Share total is just 275m. Management states it will continue to look at options as the year progresses including possibly reducing more outstanding shares or whether a share buyback and or dividend makes more sense. We will be updating on MJLB when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with MJLB.
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Disclosure: we hold no position in MJLB either long or short and we have not been compensated for this article.
Featured
Clean Vision Corp (OTC: CLNV): Overcoming the Plastic Waste Crisis
Published
8 months agoon
January 18, 2024![](https://microcapdaily.com/wp-content/uploads/2024/01/the-bottle-5128607_1280.jpg)
Clean Vision Corporation (OTC: CLNV) has experienced several interesting developments recently, but it hasn’t noticeably influenced the market with any substantial gains. Nonetheless, we believe it’s worth providing an update on the company given it’s been a few months since our last mention. In today’s discussion, we’ll explore a variety of updates and their significance, with aim of providing insight on what to expect for 2024.
Background:
Clean Vision is led by Dan Bates, and their goal is to tackle the global plastic waste crisis head-on. Their wholly owned subsidiary, Clean Seas, has developed the Plastic Conversion Network (PCN), a groundbreaking technology aimed at diverting millions of tons of waste plastic from landfills, incineration, and oceans. The PCN converts this plastic feedstock into clean fuels and green hydrogen, significantly reducing reliance on fossil fuels and lowering the carbon footprint.
For a brief 2 minute overview on the company, feel free to reference the video CLNV’s subsidiary put together on YouTube. Here’s the link.
Clean Seas utilizes proven pyrolysis technology to produce environmentally friendly products, which are sold to multinational petrochemical companies, driving the circular plastic economy. Operational PCN facilities are already in place in Morocco and India, with additional conversion facilities in development across West Virginia, Arizona, and Southeast Asia. Long-term feedstock supply agreements exceeding one million tons of waste plastic annually have been secured at no cost.
Their recently trademarked brand, AquaH®, is produced in their PCN. According to the release, it offers a differentiated green hydrogen product from carbon-neutral sources. Currently, hydrogen is predominantly produced through methods that involve fossil fuels, which of course contributes to global carbon emissions. Furthermore according to Deloitte’s 2023 global green hydrogen outlook, this could be a $1.4T annual market by 2050.
$65 Million Plastic Conversion Facility:
CLNV is making big moves in West Virginia and according to the release on October 24th, 2023, they’ve brought in some serious players—CDI Engineering Solutions and ERM—to help out with their Clean-Seas West Virginia project.
CDI has over 70 years of experience integrating engineering, design, project support, procurement and construction management services to the energy, chemicals and electrical infrastructure markets.
ERM is the world’s largest advisory firm focused solely on sustainability, offering environmental, health, safety, risk and social expertise for more than 50 years with more than 8,500 dedicated professionals operating across 40 countries.
The plan is to kick things off in 2024, turning 100 tons of plastic every day into recycled plastics and clean fuels. It’s a hefty project with a $65 million investment, creating over 200 jobs initially. And they’re not stopping there—they want to scale up to 500 tons of plastic per day over time.
West Virginia Governor Jim Justice is also on board, throwing over $12 million in state incentives to support the project.
Governor Jim Justice made a reference to Clean Seas in his state of the union address. If you want to catch the mention, go to 34:15 in the video. The three minutes leading up to it are also worth reviewing.
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Launches Global Operations:
CLNV made another significant advancement, planning to launch waste plastic conversion facilities in the European Union, Eastern Europe, and Southeast Asia. This will be accomplished through their new subsidiary, Clean-Seas Partners UK Limited (CS-UK), who of course shares the same vision of creating sustainable solutions to the global plastic pollution crisis.
Under the leadership of Managing Director Shaun Wootton, CS-UK will play a crucial role in strategic project development and investment facilitation, leveraging established relationships in the Middle East, Southeast Asia, and Europe.
To fortify effective governance and strategic direction, CS-UK is assembling a distinguished board with internationally recognized figures in banking, sustainability, and energy. This approach aims to have a diverse and experienced board guiding CS-UK in realizing its vision of promoting sustainability and environmental stewardship across diverse regions.
$340 Million Bond Offering:
CLNV even announced they partnered with a global advisory firm, Grant Thornton, to issue up to $340 million in Green Bonds. This is the world’s sixth-largest network of independent accounting and consulting firms, employing 62,000 people in more than 130 countries and had revenues of $6.6 billion in 2021. These bonds will fund the expansion of Clean Vision’s Plastic Conversion Network (PCN) under the “Clean-Seas” initiative worldwide, aimed at combatting plastic pollution on a global scale.
With the Green Bond’s net proceeds, CLNV plans to deploy at least six plastic waste conversion lines globally, with strategic locations in West Virginia, Arizona, Southeast Asia, and expansion in Morocco. The Green Bond is also expected to attract environmentally conscious investors, setting a new standard for corporate responsibility.
$15M Government Loan:
Lastly, under the capable management of Huntington Bank, CLNV has recently secured a $15 million government loan. What sets this apart is that the loan is FORGIVABLE.
A forgivable loan is a type of loan where the borrower is not required to repay the borrowed amount under certain conditions. Typically, these conditions are related to the borrower meeting specific criteria, such as using the funds for approved purposes, maintaining certain employment levels, or achieving predetermined goals. If the borrower fulfills these conditions, the loan is forgiven, and they are not obligated to repay the borrowed amount. Forgivable loans are often used as an incentive or support for specific activities, such as job creation, small business development, or other initiatives that contribute to economic growth or community welfare.
Not to mention it won’t result in any dilution for shareholders. This is an unexpected and uncommon accomplishment for an OTC company. Securing a government loan of this size without any dilution is truly impressive.
Conclusion:
CLNV has made impressive strides tackling the global plastic waste crisis, especially given their valuation of merely $22.65 million. The team has swiftly achieved key objectives, including a $65 million plastic conversion facility in West Virginia, global expansion through Clean-Seas Partners UK Limited, a $340 million Green Bond Offering, and a remarkable $15 million forgivable government loan. The vast $1.4 trillion market they’re tapping into offers an interesting opportunity with current indicators looking positive. Nevertheless, it’s crucial to acknowledge that there is still significant work ahead, and the team needs to maintain consistent execution to turn this potential into a reality.
We will update you on CLNV when more details emerge, subscribe to Microcapdaily to follow along!
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Disclosure: We have not been compensated for this article/video. MicroCap Daily is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.
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Featured
Integrated Cannabis Solutions’ (OTC: IGPK) 633% Surge: Exploring Catalysts, Company Overview, and Growth Potential in 2024
Published
8 months agoon
January 12, 2024![](https://microcapdaily.com/wp-content/uploads/2024/01/ai-generated-8477673_1280.jpg)
Integrated Cannabis Solutions (OTC: IGPK) has undergone a remarkable uptrend, surging an impressive 633% since December 11th, 2023, with 166% of that surge taking place across yesterday’s trading session and today, January 11th, 2023. Both days have been marked by unprecedented volume – Yahoo Finance reported an almost 30x increase, with 115,867,027 shares traded by close yesterday. We’re already seeing 90,092,317 shares traded this morning and it’s just barely noon. Today we’ll explore the catalysts behind the surge, offer a comprehensive overview of the company, and evaluate IGPK’s potential for sustained growth throughout 2024.
Background:
Let’s get straight to it. IGPK is the result of a recent reverse merger with Integrated Cannabis Solutions and JFH Digital E-Commerce Corp. The first thing you’ll notice is finding the website isn’t a walk in the park, we’re fairly certain there isn’t one yet, at least one that will help in any way related to more investment information. Your best bet for more any information is to check out IGPK’s OTC Market page for details, but even the company description on there is not accurate. We’ve mainly found the following information through filings, IGPK’s Twitter, and other online users.
Keep in mind this breakdown might not be flawless given we’re piecing it together mostly from what folks on X are saying. But we’ll try our absolute best to lay it all out for you.
IGPK appears to have been a shell for little while until JFH stepped in. A user on X, @stockplayer30, broke it down fairly simply, stating that the shell’s slate was wiped clean, cancelling all notes payable and any debt. Whether it’s a promissory note, convertible note, or convertible debenture, the main point is they ditched all debt. JFH has an opportunity to start fresh, and it certainly makes this deal a lot more interesting.
Just a heads up, it’s a Chinese merger. If the idea of a Chinese leadership team makes you a bit wary, you might want to pause here. However if you were in the trading game during the summer of ’23, you probably remember those crazy spikes in some Chinese Nasdaq deals. And get this – no big press releases or SEC filings to explain those sudden jumps either.
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Company Description:
Onto what the company actually does. According to @SuperRobotOTC on X, this is a digital e-commerce company based in China, here’s a link to their e-commerce website. This user also put together a great overview of the company on YouTube, if you’d like to watch something informative in video format, click here.
Another user, @igal_n, found a blurb on the company that states, “Junfenghuang (JFH) is a digital asset. It is a token issued by Uplus Future Company with the help of blockchain technology. It has no direct relationship with the original equity”.
The Potential:
What makes this story extremely interesting is the sheer magnitude of how large JFH is, the intrinsic value does not appear to be valued accurately in the market, given it’s only freshly merged into IGPK’s tiny shell company on the OTC.
Their Gross Merchandise Value (GMV) is heading north of 50 billion yuan, and post-merger profits from service outlets are looking at a hefty 10 billion yuan – yes, billion with a B.
Steering the ship is a leadership team featuring President Wang Dejun, Treasurer Xie Weiji, and Director Yang Lanfang. With a whopping 750 subsidiaries, 250,000 merchants, and 30 million registered users. We’ve also heard from other sources that the registered users could be nearly double that, coming in at 50 million registered users.
These numbers are substantial for a company with a $7 million market cap. Looking ahead, it won’t be shocking if IGPK sets its sights on moving up to a bigger exchange like NASDAQ. It’s no secret they’re already in the big leagues – or it at least appears so. If that were the case, they’d of course have enhanced credibility, more visibility, and increased access to capital with institutional funding.
The App:
Now, you might be wondering, “Sounds cool, but it’s a Chinese merger with a whole setup on the other side of the planet. Can we trust this info?” @SuperRobotOTC has also gone the extra mile by downloading the app, and gave us the lowdown in video format. On top of the SEC filings, this is an added layer of trust & credibility we can attribute to this new venture. Here’s the link to the video.
Conclusion:
Fortunately it appears IGPK is still for the most part flying under the radar. There’s not even a proper website or accurate update on IGPK’s OTC Market overview to tell us what the company even entails. But here’s the silver lining – that might mean you’re still early. The intrinsic value of IGPK appears strongly disproportionate to its current value in the market.
Our advice? Keep a close eye on IGPK’s journey as it takes on this exciting phase of growth and exploration. It’s likely this story will catch wind quickly and it could be a great time to take advantage. As @SuperRobotOTC eluded to in his video, this could be the OTC’s largest merger, with a potential $70B valuation.
We will update you on IGPK when more details emerge, subscribe to Microcapdaily to follow along!
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Disclosure: We have not been compensated for this article/video. MicroCap Daily is not an investment advisor; this article/video does not provide investment advice. Always do your research, make your own investment decisions, or consult with your nearest financial advisor. This article/video is not a solicitation or recommendation to buy, sell, or hold securities. This article/video is our opinion, is meant for informational and educational purposes only, and does not provide investment advice. Past performance is not indicative of future performance.
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Featured
Orchard Therapeutics’ (NASDAQ: ORTX) Shares Skyrocket: How To Predict Biotech M&A
Published
11 months agoon
October 5, 2023![](https://microcapdaily.com/wp-content/uploads/2023/10/laptop-3196481_1280.jpg)
Orchard Therapeutics (NASDAQ: ORTX) experienced a remarkable 97% surge in its shares following a major announcement on October 5th, 2023. The renowned global gene therapy leader, Orchard, has been successfully acquired by Kyowa Kirin (OTC: KYKOF), solidifying its position as a fully owned subsidiary.
The Agreement:
The agreement outlines that Kyowa plans to buy all Orchard Therapeutics’ shares at $16.00 per share in cash (totalling about $387.4 million or around ¥57.3 billion) upon closure. This price is a 144% premium to Orchard’s previous value at close on October 4th, 2023.
As part of this deal, Orchard shareholders will receive an additional non-transferable CVR. Holders of the CVR will get a cash payout of $1.00 per share once OTL-200 for treating MLD in the U.S. gains approval.
For those that aren’t familiar, CVR stands for Contingent Value Right. It is a type of financial instrument or contractual right that entitles the holder to a payment or benefit if specific, predefined events or conditions are met. In the context of mergers or acquisitions, CVRs are often used as an additional incentive or compensation to shareholders based on the performance or success of certain agreed-upon benchmarks, such as the approval of a drug, achieving specific sales milestones, or reaching certain financial targets. The CVR allows shareholders to participate in the potential future success of a merged or acquired entity.
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Predicting M&A in Advance:
Now that Orchard has been acquired, it’s probably not in your best interest to be trading it. What’s more important is being able to spot potential merger & acquisitions (M&A) before it happens. While it may seem like a large hurdle, enough research can put you in the right spot at the right time. And if you can do it well, there’s no question you’ll be increasing your earnings. Here’s 3 factors to think about when looking for potential M&A candidates.
1. Misvalued to the Extreme: Celgene’s Journey
Ever noticed how stock prices often have a mind of their own? Let’s talk about Celgene ($CELG), a big shot in the biotech world. Riding high with a super successful blood cancer drug called Revlimid, its stock price shot up from $25 to an incredible $139 between 2010 and 2017. Investors were all in.
But out of nowhere everything shifted. Worries about patents and competition suddenly tanked the stock to $60 within’ just 18 months – the stock had a massive swing in sentiment.
Did the once-celebrated star of the biotech world start hemorrhaging money? Was its revenue in a downward spiral? Far from it… In reality, 2018’s revenue saw only a minor dip from its peak in 2017, all the while the company was generating billions in profit.
Celgene gave it their all, teaming up with respected biotech experts, smart acquisitions of smaller companies with great prospective pipelines – even tried to engage Wall Street Critics, but nothing worked.
This twist in fortune caught the eye of Bristol Myers Squibb (NASDAQ:BMY), a company that values stability over trends. The lowered value of Celgene became a golden opportunity for them. They swooped in, acquiring Celgene, and securing promising assets. This stock market tale is a reminder that timing and how people perceive a situation can flip stock fortunes.
2. Great Science, but Lacking Funding:
Ever thought that a groundbreaking medicine should automatically become a hit? Turns out, it’s not that simple. Bringing a new medicine from idea to people’s medicine cabinets is like running an obstacle course. Yes, having solid science behind it is crucial, but that’s just the beginning. The American healthcare system has its quirks. Insurers need to give a nod, hospitals need to adapt to new methods, and doctors need to be convinced.
This process costs a lot of money—hundreds of millions, even a billion dollars—after all the scientific tests are done.
When you come across a small company that’s shown promising results in phase 2 or even phase 3 trials for a new drug, it’s time to dig into the numbers and dive into their financials. Check their balance sheet and cash flow. If financial jargon isn’t your strong suit, focus on a crucial question: “How fast are they spending their cash each quarter?” For instance, if they’re burning around $25 million per quarter and they only have $75 million left in the bank, alarm bells should ring.
Despite good results, a lack of funds could lead their breakthrough drug to end up in the trash bin. Smart financial moves are essential for turning promising data into real-world medical solutions.
This is where M&A steps in. Big pharma companies, with their knack for navigating red tape, join forces with agile biotech firms. M&A acts like a connector, ensuring innovative medicines actually reach the people who need them.
3. Key Shareholder: End of Career or Fresh Start?”
In the world of biotech, M&A isn’t just business—it’s about people and their journeys. Some founders, after years of battling the unpredictable industry, choose acquisition to secure their life’s work. On the flip side, young, ambitious founders, full of ideas, might be tempted by big corporations promising vast resources.
It’s not uncommon for a biotech company with a promising phase two product and solid data to command a valuation as high as $500 million. At this stage, the founding team has likely toiled in relative obscurity for years and looked to investors to fund their ambitious biotech endeavors.
Retaining majority control as a founder throughout product development is rare due to exorbitant costs. But the founder, or founding group, could retain around 5 to 10% of the company’s shares, possibly making them the largest and most influential shareholders. Hence, if Pfizer proposes to acquire the company for $500 million, that’s $50 million for the 67 year old scientist founder, who might just be tempted to take the giant payout and move to Bora Bora.
Another scenario involves young, inexperienced scientist-founders. This may seem counterintuitive; shouldn’t youth embody boldness?
Sometimes, these founders insist on going all the way. Yet, their inexperience can make them vulnerable to sophisticated corporate pitches. They’re promised abundant resources, a worry-free life, and a chance to change the world by teaming up with a giant like Pfizer.
Despite the allure, merging with massive corporations often stifles once-independent entrepreneurs. Ask anyone who’s sold their company to a corporate behemoth – it often isn’t conducive to the flourishing of once-autonomous entrepreneur.
Conclusion:
These tips can be crucial in spotting potential biotech takeovers, but there are still other factors to consider when piecing everything together. Even then, there’s no guarantee of a surefire deal. But if you make smart, educated guesses with thorough research, you can reap substantial returns – a little luck doesn’t hurt either.
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