Through a Mayne Pharma, Concisely

Through a Mayne Pharma, Concisely

I put 5% of the 10foot portfolio in Mayne Pharma (ASX: MYX). My purchase thesis was way too long to be useful to readers. I have created an abbreviated version here:

  • Mayne is undervalued given its cash earning ability
  • Performance in FY18 will provide a much clearer picture of the combined organisation’s (post Teva/Allergan portfolio acquisition) earnings potential
  • There is some growth potential in the core businesses
  • Debt is significant, but survivable in the event that things move against the company
  • Price is undemanding in the event of reversal of earnings


This is built on a few assumptions:

  • Teva/Allergan portfolio is fundamentally sound
  • Much of the impact of Doryx generic competition is already priced in
  • Based on industry dynamics etc, current levels of profitability are sustainable
  • Big pharma is hugely self-interested and incentive to compete on price is low
  • Big pharma has tentacles everywhere and likelihood of regulation adversely affecting Mayne is low (e.g. via opiate sales)
  • Belief that Mayne hasn’t been price fixing
  • Belief that management will deploy cash earnings wisely (would like to see debt paid down and minimal acquisitions)

And runs a few risks:

  • Profitability may not be sustainable
  • Teva/Allergan portfolio turns out to be a dog after all
  • Risk of previously undisclosed wrongdoing/ price fixing etc
  • Regulatory risk
  • Increased generic competition (both on market share and price) in Mayne’s more exclusive products


On 30/08/2017 I bought 800 Mayne Pharma shares at $0.6625 plus brokerage, for $544.95, or $0.6811 apiece.

I own shares in Mayne Pharma. This is a disclosure and not a recommendation.

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