If you have not read my first post I suggest you do that here, on December 1st SAB Biotherapeutics (SABS) released phase 2a influenza antibody results showing high efficacy and safety in all patients treated.
This further validates SABS polyclonal antibody platform as their polyclonal mix was created with a NON SPECIFIC strain and still demonstrated efficacy against variants.
“One remarkable aspect of these results is that SAB’s Tc Bovine™ were not immunized to the specific influenza virus strain that was used in the challenge study,” added Christoph Bausch, PhD, Chief Scientific Officer of SAB Biotherapeutics. “Nonetheless, the statistically significant reduction in virus load and symptoms that were achieved confirm that SAB-176 demonstrated high cross reactivity to this pandemic strain. This reinforces a unique and timely feature of our DiversitAb™ platform—the diversity of the human antibodies it produces gives our therapeutics the potential to be broadly neutralizing to both known and unknown viral variants—a very valuable feature when addressing rapidly mutating pathogens.”
Another idea is that immunosuppressed patients struggle with a natural competent immune response but with essentially hyper-vaccination of cows potency of SABS polyclonal antibody remains high. (40x stronger than plasma antibodies according to clinical study) Vaccines and monoclonals struggle with triggering a natural immune response at times making them less effective.
Scalability
I continued to look through some SABS presentations and found out that scalability may be an issue in short term but long term scalability is cheap and easy (breed more cows)
SABS CEO Eddie Sullivan stated that their cows can cover the entire global market demand for influenza antibody treatments. SABS already has modified cows at their farms in South Dakota ready for blood harvesting making the scale up process easy compared to lab produced monoclonal antibodies from Regeneron and Eli Lilly.
“Each animal is capable of donating 30-45 liters of blood per month which translates to several hundred doses per month”
With 500 cows and 300 doses that is 150k doses per month.
Given that monoclonal antibody production takes several months and costs $80-$200 per gram with say a few thousand cows SABS can create millions of antibody doses per year that are cheaper and more effective. (Under $10 a gram)
For longer term demand my opinion is this:
Covid-19 likely to turn into a more extreme version of the seasonal flu (H1N1 or flu type A is still a seasonal issue and the pandemic unfolded over a decade ago) Demand for cheaper more effective covid-19 treatments globally will still remain high for the foreseeable future
Competition
Eli Lilly market cap increased by ~21 billion during a period of ~1.3 billion in covid-19 antibody sales (sales fell dramatically in from 880 million in Q1 to 120 million in Q2 due to monoclonal variant resistance)
Regeneron market cap increased~ 22 billion during a period of ~4 billion in covid-19 antibody sales (Q2 2023 showed 100% increase in EPS from antibodies)
GSK and Vir biotech increased 12 billion and 1.5 billion respectively during a period of ~ 1 billion in antibody sales
If we attribute a conservative 20% of the rise in market cap to covid-19 antibody sales that still puts us at a P/S of ~2.5 on average for these comps
50% attribution P/S ~5.5x
70% attribution P/S ~8x
Valuation
Covid-19 monoclonal mix sells for around 2k a dose, lets say SABS sells SAB-185 at a conservative estimate 50% discount from competitors for 1k. If emergency approval goes through in the next few months $SABS would likely sell over 1.5 million doses worldwide in the next year or so (cheaper, more effective, faster to deliver) putting them at a revenue of 1.5 billion. I don’t think this is a bold assumption as SABS antibodies work with all variants.
Assume a P/S of 2-3 given validation of platform and the company trades at 4 billion or ~ 10x the current share price.
Given how cost effective the cows are for $SABS, $SABS could see a nice profit per share on covid-19 approval
Risks
Antibody mix does not get approved for emergency use after phase 3 results
SABS has not released any specific info on how many cows they have which means the scalability of the covid-19 product could become an issue. In 2018 when SABS built their new facility they aimed for about 40 cows on site and they said final completion of their phase 2 facility would result in 500 cows. If SABS lacks needed resources could delay production substantially (conception of genetically modified to full grown cow is ~ 3 years) Naturally they can still draw blood from younger cows just not as much.
Hoping since $SABS was backed by the department of defense prior to covid-19 + apart of a pandemic readiness response program, they went into overdrive cow reproduction shortly after the pandemic started. I’m sure they have scaled up but not sure if up to 500 cows yet.
Plays
No options listed but stock and warrants are good
Warrants trade around 2.50
Asymmetric Risk
Would you rather lose 40-50% on denied EUA or make 15-20x on warrants? You decide. As a speculative play it is worth throwing some money at.
Disclosure:
I am long 10k warrants in $SABS.
I am not a registered financial advisor, do your own research on the company
Once again asymmetric risk is the key!
This article was written by u/wannabehedgefun.
