The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
SOme veyr goofd info Dbox.
Therfore, the company has $5M+ cash in grant money ($2.8m at back end of 2019 + $2.6m awarded in June 2020. And the compnay has stated on Friday update ''These are both NIH grants and together cover "60% of the development cost of IB" at current staffing''
They have nealry £1m cash and very low burn - and now looking for major sale and royaltie on FDA approved product. Finally, some payoff. Gald I am invested in.
Also noted i could not but at 5.20p or 5.30p on close? Was total NT, but you could sell as much as you like.
My target 11-13p in the short term before anything else. Just too much demand and not enough sellers - especially after 2 days mm raids to take out all stops etc.
All good posts.
I'd like to up skill myself in the industry and technology.
IQ-AI will know what the royalty expectations are to obviously work out fair value for the cash part. This detail should be made available when the deal is done so the market can rate it.
Selling StoneChecker completely removes the operating and marketing costs entirely but delivers ongoing pure revenue/profit. I guess then a PE ratio attaches to IQ-AI to drive a re-rate and tells the market IQ-AI no longer needs to issue "cap in hand" shares.
Anyone with any thoughts on "similar" deals or peer group comparisons? At the right point, it'd be good to see an investor presentation.
Excellent posts recently. Your analysis is correct IMHO. My only problem will be at what time I crystallise profits and bail. I do half expect the company to attract corporate action, it is easy to see in a years time that the SP could breach £1. Joy. But I don't think I cam hold my nerve if this takes off though. or can I?
Not there yet though so will stop paying close attention now, I am going to sit back and enjoy the ride for now. I have waited years for this.
Company valuations are based on assets and growth..
Any Company Debts and weak current balance sheet are irrelevant when the company is managing them well.
Most Ftse companies carry huge debts but they are on the top valuations as they have rich assets and growth to support its debts and strengthen their balance sheet. The example of the second biggest oil company is Shell ...has more than $70b debts but considered one of the safest to invest..
IQA is solid with rich assets and growth with massive future prospects to generate revenue and profits. They have cutting edge technology that is in demand by a huge health industry .
The current sp is cheap and the future prospects is very positive and future news will only push it further upwards to reach its real valuations and not the current market valuations as if it’s still R&D company which is no longer the case as we have already moved to marketing our products and selling to generate revenues and profits. Their current multiple assets are winning awards in this competitive industry...
Even if finance raise is needed..it will be positive as it will be for expansion to generate more revenue and profits. This will be even more positive to shareholders..
IQA share price is currently underpinned by the sale of stronechecker and soon will see the deal details which I have little doubt that it will be very pleasing to us and the market.
The current market valuation is ridiculous and soon re rate.
Yes I have big holdings here now and very confident.
GLH
Hi Dshox
Thanks the reply. I did comment that the grant will help. It’s good to have opposing views. Like I said I have a small position here but I am cognisant that they may well raise.
With respect to shorting, sure but only ever on FTSE not aim. Far too volatile to go long or short. If you hone your skills on aim there are ‘easy pickings’ elsewhere by comparison. That said got a long on BTC may close if it doesn’t break $12
Anyways be interesting to see how it pans out.
ATB
(Trek)
Good reply DShox
Trek, evidently the cash burn is several orders of magnitude below your 5th August expectations no? At the half year to 30 June there was £611k cash in the bank.
The 5th you said:
"If you look at the balance Dec 2019 it’s £865, 875. Admin costs are £859,171. So even without all the other expenses they are evens. Then factor in carry forward loss of £617k, zero tax liabilities (obviously) and allowing for same in revenues there really isn’t much cash left when you take in the spend from Dec 2019 to now."
I don't think you "freewheeling to a deal" can be used on the 5th and again yesterday.
I note your reference to a £2.75 five year grant to "subsidise revenue" and "(this may help)". Actually the number referenced in the half years is $2.8m. You also missed the $2.6m awarded in June. These are both NIH grants and together cover "60% of the development cost of IB" at current staffing. Very specific to IB and includes all costs, so wrong to separate R&D from administration costs.
You will do well to note IQ-AI intends to make further applications to NIH for additional grants in 2020 and following IB being recognised as the US 'national standard' in June, do you not see a situation where IB could be almost fully covered by grants? That would be an extraordinary achievement for a micro cap health tech co.
I note in your posting history you are partial to a short or two and frequent this type of stock. That's fine, it's a legal trade after all.
I think IQ-AI management would take exception to this being called a "lifestyle company". I see the complete opposite given director holdings of 36%, rapid development of StoneChecker and IB, and imminent sale of StoneChecker that will be transformational to the share price.
If you watch the Proactive interview, IQ-AI wants a more robust market cap so it can take advantage of acquisition opportunities.
Never rule out a raise from a micro cap, but not all raises are made equal.
Waffle.
Tryandtryagain,
What bit do you want me to explain. Do you understand that parentheses = loss?
Look at how much cash they raised from CLN’s on my earlier post. Sure look at cash balance but then factor in losses and run rate from those cln’s and if you need any further convincing just DYOR and compare this going concern statement with other companies that are cashed up or even borderline...
As an example ( my words from memory)
“ co x has enough cash and cash equivalents for the foreseeable future to meet all foreseeable liabilities, reasonable risks and meet criteria to remain a going concern for the coming year.... “ or even type in a covid caveat! Like as long as no further covid deterioration we will continue as a going concern or words to that effect as opposed to...
My earlier IQAI post re going concern statement and likely needing cash, you get the gist.
Likely in business speak = inevitable! It’s just when!
Do you now get it?
In fact I don’t know why I bother. It’s like unless you blow smoke peeps aren’t interested! I have tried to explain that whilst the financial situation is negative they could take a payment non refundable or refundable for the rights to explore DD.
This is a sought after product.
My shty research basing this on ONC blood antibody sales at £70 a pop to PHE or €1000 for another antibody test or the last $26m US deal for thousands of tests is as close a comparator as I can find.
It’s not in the same league as the billions for treatments like 4D with huge milestones but it’s still imo significant.
Look at it this way a £5m cash deal is immense for this balance sheet. It’s gonna be north of that. I reckon £20-£26m and that would mean buy out. So an investment here at 7p should do well. And investment here at 9p will see a decent profit and much needed relief.
So my punt stays but here’s a new phrase this is a lifestyle biotech!!!
You’ll work it out. Usual caveats!
Trek
That's a load of waffle to try and prove your previous post correct! You were wrong end of and when called out you argued! Cash burn, seriously we are not running a 3 bed semi here.
Ah well I guess that’s the finance question answered! Listen to Trek, I know how to read a balance sheet.
But anyways like I posted before it can be resolved with a little innovation. The positive is though now looking at the numbers yes they could freewheel to a deal but I don’t know if they will. They may go for cash either the tried and trusted CLN or bookbuild.
CLN is pushing the leverage of a few investors. If TB buys again that’s a big rec. If it’s accelerated bookbuild I’d say it’s sharing the risk unless we get a decent director take up.
The cash burn here is astonishing, in all honesty with lock down in June and capex covered I don’t know what they have been doing with the money. The results aren’t audited and the detail is very thin!
If you need anymore hints...
“The current economic conditions continue to create uncertainty, particularly over (a) the level of demand for the group's products; and (b) the availability of finance for the foreseeable future. The group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that additional funding will be required either via an issue of equity or through the issuance of convertible loan notes. The Directors are reasonably confident that funds will be forthcoming if and when they are required. The Chief Executive Officer has provided a letter of financial support to the Group to make sufficient funds available, if required, to ensure the Group can meet its obligations over the going concern period.
Taking in to account the comments above, the Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Therefore, they continue to adopt the going concern basis of accounting in preparing the financial statements”
So for those that can’t read a balance sheet and those that think they can but need a little help you have a ‘sugar daddy’ CEO balls deep!!
Anyways I’m still freewheeling as it’s gonna be a smash and grab at a shade over 9p which is a decent punt return imo! And that makes this a buy and forget pillage!!
All the best
Trek
Cash at year end was £866k. Post period end it raised another £100k. Its annual pre-covid burn was £860k. And "during the year, the Group did not invest in any capital expenditure (2018: £nil). The Group made an investment in product development during the period of £112,115".
I see very limited risk of dilution pre potential transformational deal and re-rate. Punters should note it's not all about StoneChecker either.
Hi Swinger,
I didn’t see that one ‘issue of equity’. So it actually means that the cash burn has been higher!
They raised.....
5th Feb 2020 CLN £60k for this QPB
13th Jan 2020 £26k from options.
Last QPB, Dec 2018-Dec 2019
1st Oct 2019 £500k issues of equity due to ‘investor demand’
4th Sept £2.75m grant over 5 years to subsidise revenue. (This may help)
6th Aug £275k bookbuild and £20k ish in CLN’s. They asked for 250k got 275k due to ‘investor demand’
Big CLN 29th May 2019...£250k..
“IQ-AI is pleased to announce that the Company has issued £250,000 in nominal amount of 6% unsecured convertible loan notes 2025, convertible into 16,666,666 ordinary shares of 0.1p each in the Company ("Ordinary Shares") at a price of 1.5 pence per share ("CLNs"). The funds raised as a result of the issue of the CLNs will be used to provide additional working capital for product development at the Company.“
Then 11th March 2019..£268k
“Q-AI is pleased to announce that the Company has issued £268,500 in nominal amount of 6% unsecured convertible loan notes 2024, convertible into 13,425,000 ordinary shares of 0.1p each in the Company ("Ordinary Shares") at a price of 2 pence per share ("CLNs"). The funds raised as a result of the issue of the CLNs will be used to provide additional working capital for the Company. The funds raised enables the Company to fully execute its current business plan and shareholders should take comfort that the Company is now able to fully execute its current strategic objectives, following this, initially, non-dilutive fundraise. “
TB has been financing the co through CLN’s. Much of the early cash would have been used for Capex & R&D as well as working capital (wages, fees, travel etc)
If you look at the balance Dec 2019 it’s £865, 875. Admin costs are £859,171. So even without all the other expenses they are evens. Then factor in carry forward loss of £617k, zero tax liabilities (obviously) and allowing for same in revenues there really isn’t much cash left when you take in the spend from Dec 2019 to now.
Like I said revenues will be impacted by covid, significantly plus they still have R&D cost.
Hence my comment is ‘can they freewheel up to the deal or do they raise now on the back of the SP’.
Either way it shouldn’t matter short term as TB has a lot of skin in this. Even though he would get a decent placing price he may not have the cash (I don’t know) but he certainly wouldn’t fancy the dilution. Better to get over the line and let the deal plug the financials.
Any cash/royalty deal will be absolutely transformational for IQAI but imo it’s tight.
Hope that helps clarify.
Trek
They raised again in October at 9p. They do not need money as they burn around 600k a year unless costs have gone up??
IQ-AI is pleased to announce that due to demand from both new and existing investors, Peterhouse Capital Limited has raised £500,000 on behalf of the Company through the placing of 5,555,556 new ordinary shares (the "Placing Shares") at a price of 9.0 pence per Placing Share (the "Placing Price") (the "Placing").
Swinger,
They raised £275k last August, 2019. See RNS 6th Aug 2019.
My numbers are from the finals to year end Dec 2019. So based on admin costs run rate and inevitable revenue dip due to covid in H1 this year and only minimal amounts from CLN’s they are on fumes!
But like I posted it is not necessarily a problem if they are being a bit innovative with the deal.
Atb
Trek
They should have plenty of cash. They placed 500k late last year at 9p
They burn around 600k per year and had 865 in December. So they have cash until next year!
Lets see the price but I would imagine if the major wants this would it matter to them if they paid 10 / 20 or even 50 million. Speculation but I would hope its well over the current 10 million.
Well I guess the question is do they have enough cash to see them through before the deal, assuming it completes.
Funny thing is I looked at this company last weekend and chose to add at Avct instead! Lol! Anyway I managed to grab a few this morning.
Last years revenues were £267,868
Interest payments were £28,975
Admin costs were £859,171
Overall losses came in at £617,067
Cash on books was £865,875
So on a repeating basis they are looking at at best staying evens with a small amount from CLN’s.
The yoy revenues were around £100k up on 2018. But I doubt we will see any growth this year as covid has put back quite a few ops. Marking time would be a great result but biased to H2.
So I reckon we are running on fumes. This was why I didn’t buy earlier even though I really liked the science.
Ok so why buy now? We’ll if Mr Brown is being smart I would charge AnnonPharm to undertake DD. Shows commitment and access to IP comes at a cost. It only needs to be a token amount say £60-100k which would make all the difference on these numbers. Money back if you buy!
I have no idea what a product like this is worth. I note the chairman’s statement says
“we recognize that merger and acquisition activity may accelerate revenue generation, fulfill technical gaps, and a potentially faster time to market. Expanding our footprint in medical imaging to better serve patients remains our unwavering goal, and we will remain aggressive in this pursuit.”
So it could even mean a takeout or if someone wants stonechecker now that they know it’s having the tyres kicked buying IQAI may be the only way to secure it. If that’s the case they’d have to get a wiggle on!
So cash is an issues, they may place on the SP rise if they can’t freewheel up to a deal.
If they do a deal they gotta make sure it is based on potential and not existing revenue multiples. Bag that and the cash problem will be sorted for some time and they can invest in the other platforms. It will also put them in a stronger position should a buyer come out later, JV, merger etc.
So with all the risks this deal could be transformational for the co and the DD won’t take that long. Validate product, Sample effectiveness, Historical Checks, Revenue check, Customer base etc. Different people will look at different aspects and it will be pulled together by a project manager. 6-8 weeks if resources are available is my guess.
Makes for very good punt with a lot of upside even from these levels.
Atb
Trek