Healthcare

Report by Forensic Alpha

Forensic Alpha has previously raised several accounting flags at BAVA, particularly around inventory and capitalisation of costs. However, publication of the biotech company’s Q3 report saw fresh issues arise, mostly around working capital. The combination of bill-and-hold transactions with rapidly rising receivables (+78% y/y to DKK 1.2bn) is worrying. BAVA is clearly expecting a big ramp up in demand for JYNNEOS into 2024 and this may well override any concerns Forensic Alpha has about phasing. However, investors should at least be aware of the risk that revenues are "pulled forward" from a future quarter.

Healthcare

Report by Forensic Alpha

Surplus to requirements - growing risks identified within the current vaccine portfolio. Inventory levels are near all-time highs, while provisions against that inventory have fallen significantly. The combination of the Omicron variant and seasonally weaker fourth quarter sales means the conditions exist for a sizeable write-off. Forensic Alpha’s Dragonfly (MI) system has given BAVA a risk score of 9 out of 10, with multiple red flags identified in both the governance and accounting sections.