Status: Closed | Initiation Price: $4.74 | Result: +58.9%
Coverage ended on July 23, 2025, as communicated through a performance review. The original text is reproduced below for reference:
LFCR, with one exception noted below, has played out largely as expected. Initially, management declined to confirm whether double-digit growth was a reasonable expectation beyond FY25. At the time, I argued that “such growth is achievable even with just the existing late-phase development pipeline and conservative time to commercialization assumptions.” A month later, the company introduced medium-term guidance targeting “double-digit revenue growth [and] improved adj. EBITDA margins consistent with those of the most reputable peers in the injectable CDMO sector,” which it then raised to 12%+. However, while the key catalyst had been a potential GLP-1 announcement, the company surprised many, including me, with the sale of its 10-head isolator filler, despite clues in sudden wording changes. Management has since assigned an 80% probability to a change in control event, making a takeout the most likely outcome. An encouraging development, though, is the recent hiring of a new Chief Commercial Officer, who previously secured Viking’s GLP-1 business for Corden. With rumors suggesting LFCR turned down bids in the MSD-to-HSD range during its strategic review, it may be worth holding on a bit longer, but for me, coverage ends here.
LFCR has recently experienced a rollercoaster of events. In just the past few quarters, this company has faced more major episodes than most do in their entire lifecycle.
During the last conference call, an unidentified analyst asked LFCR’s management whether double-digit growth is a reasonable expectation beyond FY25. The question went unanswered.
The truth is that such growth is achievable even with just the existing late-phase development pipeline and conservative time to commercialization assumptions. A better question would have been how much growth could accelerate if any of the catalysts outlined in this write-up were to materialize.
We are all aware of the GLP-1 saga and the surge in demand for these weight-loss drugs. This surge has come with consequences, with the US now experiencing unprecedented drug shortages. Amidst this, LFCR distinguishes itself as one of the few companies with excess capacity. Just last week, the company announced that its filling capacity has doubled, with the new 5-head isolator filler now "GMP-ready and operational."
LFCR currently has an annual demand of ~11mm units, with significantly faster fill rates expected as the identified catalysts come to fruition. For example, if the company becomes a supplier for a GLP-1, it could fill its projected ~70mm capacity within just five years. As the CEO noted during the Craig-Hallum Bioprocessing Conference, LFCR is in "a number of conversations with large multinational pharmaceutical companies who have been waiting to see that [the new filler] is ready to go."
There are quite a few write-ups on LFCR out there. Below are some of the best for your reference:
Laughing Water Write-Up: Link
Quick Pitch by Special Situation Investments (SSI): Link
VIC Write-Up and Messages: Link
Anonymous X Thread: Link
Laughing Water 1Q23 Investor Letter: Link
Laughing Water 2Q23 Investor Letter: Link
Laughing Water 3Q23 Investor Letter: Link
Laughing Water 4Q23 Investor Letter: Link
Laughing Water 1Q24 Investor Letter: Link
Laughing Water 2Q24 Investor Letter: Link
Greenhaven Road 1Q23 Investor Letter: Link
Greenhaven Road 2Q23 Investor Letter: Link
White Falcon 1Q24 Investor Letter: Link
Arquitos Capital 4Q23 Investor Letter: Link
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