Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I took this off the Nouryon Twitter feed this morn. Encouraging...
“That’s a wrap! Last week, our personal care team headed to Seoul, South Korea, for #incosKorea to showcase our latest innovations in skin & hair care, including our bio-based polymer Amaze SP. Amongst the 300+ exhibitors, including Nouryon, it’s clear that the future is natural!”
In some ways the hydrogenics deal highlights a real risk for us - that ITM is sold way too cheap. The management at Hydrogenics, owning around only 1% of the company and after a long, rocky road as they awaited commercialisation, have basically blinked. I don't know what the technology at hydrogenics is worth to Cummins, but I can absolutely promise you that it's way in excess of 3 x what they paid for it. Cummins will be modelling hundreds of millions of sales from the tech over the next 10/15 years.
Equally, ITM and Ceres and the others in this fuel cell/hydrogen arena are really vulnerable to a bid JUST at the point where they're now globally relevant and can be highly profitable. I hope Bamford and other big holders tell management to hold their nerve - or at least screw a decent exit price out of anyone like Shell who come knocking.
Funny, I just don’t see the funding risk. This biz now runs on a shoestring. Negligible U.K. costs and marketing mostly outsourced to the likes of croda and nouryon.
The major write downs we saw last year leaves the b/s cleaned up and light. That means the return on capital is going to go off the charts and I think that’s what we’ll begin to see in next results.
From memory, the fixed plant they’ve got producing the acid cost $1million yet we could get circa $30million of sales from it and the current set-up.
I worry that the pace of sales at nouryon might disappoint, but it could also blow out the lights, I worry about any overhang risk and hope for a swift tidy-up if one exists, but I don’t worry about a cap raise.
Hydrogenics Corporation Announces Arrangement Agreement With Cummins Inc.
this should recover well over the next few weeks and months now that over 11% of the stock has been shifted in one trade.
we can wait for the TR-1 but it has to be Woodford (who held just over 12% according to the BMK website).
It already has a substantial Norwegian investor in Ferd. It'll be interesting to see who has bought this stake - another Scandi? BMK successfully raised debt in the Scandi market very recently.
It's a really strong business, exposed to structural trends in the global demand for fish and shrimp.
CEO's statement in the report is worth reading. I'm relaxed in this name. This was always going to be 'backward-looking' in terms of what they can report/talk about. However, the CEO's statement does reminds us of the product pipeline/IP/potential that sits behind the current sales relationships with Croda, New Wave and Nouryon and which are valued (rightly at the mo) at zero.
Am really looking fwd to the H1 19 results, when we can see the new management and new relationships really start to make a difference. Here are a few quotes from the CEOs statement that I liked:
"Beyond our key focus on higher revenues from current products, we do have an extensive portfolio of novel chemistries with potential for new products….For example, we have bio-based superabsorbents that ....may offer functional advantages for use in certain hygiene applications. We are also investigating functional additives that may improve the performance and expand the market opportunities for biodegradable plastics."
"As detailed in the Chief Executive Officer’s Statement, the Group entered 2019 with a strong cash position to grow revenues and improve profitability with a full complement of marketing partners for its core products"
"Through our own work and the interest of our partners in the functional advantages of our polymer ingredients, we expect a steady stream of projects will advance to strong revenue growth for our current products. As noted above, for example, we reported the first use of our Itaconix® CHTTM polymer in a European automatic dishwashing detergent. I look forward to reporting on other new customers emerging from our project pipeline."
"Although apparently small, I am encouraged by the breadth of early-stage product use behind this growth and the indications that our bio-based ingredients are delivering key functional advantages to customers’ end- products in a wide range of applications. "
We are mentioned in the Times today, contrasted against the $2bn valuation for drug discovery peer, BenevolentAI. The valuation disparity is kind of nuts. No Woodford ownership/overhang issues at C4X, either...
In the US, this is seen as a positive for other listed NASH peers like Viking Therapeutics. I'd like to think it doesn't do the valuation of the Pharmaxis LOXL2 inhibitor any harm either. Where is that licence deal? Have tried to be a grown-up but am getting a bit bored of waiting now....
https://www.statnews.com/2019/06/11/cymabays-nash-drug-ambitions-dealt-serious-setback-with-negative-study-results/
This is getting more perplexing all the time. Below is taken from Modern Water's Linkedin page from y'day. It's a really encouraging development - I think? - yet no RNS etc..
Dow - they don't come much bigger. I've pasted a link to the Dow product that the Modern Water monitoring division will be collaborating with. It seems to be an important part of oil&gas field maintenance / surveillance....Not sure if it also includes fracking sites - i guess so. If it does, it would be even more encouraging.
Meanwhile, back on AIM, we are at 3p and waiting for godot. kind of weird.
"Modern Water is proud to collaborate with Dow on the development and commercialization of the Dow Traceable Polymer Kit. This kit allows polymer users of the OPTIDOSE™ and ACCENT™ tagged polymers the ability to measure free polymer remaining in the system resulting in more accurate dosing of water systems. We look forward to offering this product to Dow Optidose and Accent polymer customers globally. hashtag#water hashtag#test hashtag#monitoring hashtag#polymers hashtag#Dow hashtag#ACCENT™ hashtag#OPTIDOSE™
And here's the link to the Dow product's applicability - across Oil and Gas drilling
http://msdssearch.dow.com/PublishedLiteratureDOWCOM/dh_08eb/0901b803808eb986.pdf?filepath=oilandgas/pdfs/noreg/812-00023.pdf&fromPage=GetDoc
https://www.pv-magazine.com/2019/06/10/green-hydrogen-airs-at-g20-meeting-of-energy-ministers-this-week/
Very bullish read....the G20 meeting in Japan is likely to lead to more headlines and project tenders in the next few weeks.
Am trying to think this one through....
I've got several questions::
1. why didn't the company suspend dealing in its shares until the short term funding gap is sorted?
2. does this announcement nudge the gibraltar administration into signing the contract? or are they presumably immune to the stress that their political inertia has, in-part, put onto a development partner?
3. what would be the write-down costs of cutting membrane all-together, auctioning its IP, and focusing on monitoring and its circa ÂŁ4mn of growing sales (and, we hope, Gib as a one-off project). would modern water stock go UP on that announcement?
This isn't the usual AIM cashflow failure story and that's why the optionality in this business is so intriguing. You'd argue that monitoring is a good biz, already break-even and 'in the money' and worth some multiple of sales in value; Gib must be close to being in the money or else they'd have to tell us, and I think they would have suspended stock; membrane is deep out of the money probably not worthless but best to assume so.
sure, panicked selling can take it lower but i do think holders should ride this out for good/bad because several of the good scenarios could be very good indeed and to sell here generates peanuts.
I think we will hear very soon on funding. We have to. And that's why no suspension.
i think you make a fair point. it's rational to assume that any buyer of stock will be a strategic (industrial) buyer or specialist investor. effectively, xeros is even more in play than it was before the Woodford moment. It will not be lost on the M&A bankers that a significant stake in the business is potentially biddable (although it's now small beer for them given the market cap fall).
I actually think that the bears on many of the Woodford positions are under-estimating this strategic buyer risk. Sure, there won't be industry/specialist buyers for all of the Woodford kit which, apparently, is to be sold. But where there is a bid, the price action could surprise because the valuations are kind of nuts. Some stuff, like ETX, is trading below cash, for e.g. Some people will make a lot of money out of this episode.
The risk at Xeros is that it gets taken-out at a stupidly low price. Even twice this level would be heart-breaking, given the long term potential of the technology across so many global industries. It's a sad and difficult moment. Woodford has been a brilliant, patient supporter of UK innovation and it's a shame that ineffective politics and Brexit uncertainty, etc. has made life so difficult for him.
Agreed, Cookie. I think a US listing will be a priority for Joe. It will also be a priority for the sophisticated convert / debt investors like Highbridge Capital. They're going to want to have a chance to hedge their convertible exposure if they can by the most liquid means possible, and to be able to exercise/trade the converted stock if /when they exercise. The AIM market is not going to allow these sophisticated investors to do what they want to do.
Although there are costs and risks from the pursuit of the US listing, if it can occur, it does set the stock up to benefit from a significant re-rating via new investors. If they have good phase 3 data then it would, presumably, be a breeze. That probably means that the upside scenario to good phase 3 data in 2020 is now even greater than it was.
let's hope it's the start of commercialisation. I think i see it as a small positive....my one criticism is that it's a bit parochial...one country ( at least it's italy and not moldovia) is a start but would have been more compelling if it had been with a more pan-europeans/international corporate......
if they try and build a business with individual collaborations from lots of smaller local distributors then that's a lot of leg-work.
For e.g. I would have preferred updated news about the James Briggs relationship and growing momentum there....
This is the end-game we can hope for at ETX...recall that Novo Nordisk, perhaps the most intellectually respected of all the big pharmas (and Danish!), has backed the ETX drug discovery platform over others....
From Endpoints News today:
"Amgen is offering to buy its Copenhagen-based partner Nuevolution — popular with Big Pharma leagues for its drug discovery engine — for about $167 million.
Nuevolution first tied up with the large US biotech in 2016 to work on finding fresh cancer and neuroscience drugs for Amgen, in a deal that made it eligible to receive up to $410 million in developmental milestones for any therapy that makes it across the finish line. In 2018, Amgen opted-in on two programmes and is now covering development costs, and can exercises its option to license the candidates.
Founded in 2001, Nuevolution is focused on small molecule drug discovery using its platform Chemetics, which has been endorsed by an array of collaborations, including Amgen, Almirall and J&J. The capital from these alliances — which has added up to SEK 530 million ($55 million) this far, according to Edison analysts — is fueling the development of Nuevolution’s in-house arsenal of preclinical drugs. In 2015, the company took itself public on the Swedish bourse with a small, but upsized, IPO that added $29.5 million to its coffers.
I continue to be impressed with the commitment and exposure of the key management team to this story. They keep on buying even though they know that there will be a need to raise more capital at some point in q4 - unless a licence deal (china?) happens earlier.
I love the microbiome theme and I think I understand where this stock and theme sits in the classic growth chart: we've been through the hype phase and we're now in the trough of disillusionment. The next stage is an improving operating margin and the 'slopes of enlightenment'. If you watch it and also track newsflow at Vedanta Biosciences, you can see that both these two lead players in microbiome are at key inflection points over the next 12 months.
Am very happy to hold this on a two year view and would buy more on a cap raise and if I saw an RNS confirming the exit of the background seller - Invesco, perhaps?
Calm down, Bronx...That's the whole point of the Chapter 11 process and the reverse takeover - to deal / settle the litigation issues and allow the underlying business to restructure and be taken-over. it's the American way.
There will be no residual liability for Amryt shareholders at the end of this process. It's a good deal, in part because the synergies are unusually straight-forward to extract and so meaningful (in particular Amryt no longer have to pay away to Aegerion).
umm...well, the selling has taken it straight through the NAV and now well below cash...They stated last month that they're funded into the second half of 2020...I keep on nibbling at this one, despite myself. I'm backing the jockey not the horse. I think the CEO is good, really good...I think he's good-enough to keep landing agreements before any need to fund. Time will tell...
some strategic missteps, to be sure...but some of the issues are around the incredibly long development cycles you get at global OEMs...They want to test product to minimise brand reputation risk, etc. But, also, until they really feel pressured into switching to a low water/detergent option OEMs want to keep the production lines rolling with existing product because that's where the margin is. New product involves execution risk/marketing spend, production line retooling, etc. etc.
So, to a certain extent, we're in the lap of the political/social gods. Will the eco sustainability movement provoke sufficient pressure to get xeros licensed product adopted in mass market residential and commercial laundry before we run out of road??
What has really damaged the chart is the sell-down by one of the original cornerstone investors - Invesco. They've been indiscriminate sellers over many many months. Then there was a need for more capital so a raise had to take place at a super cheap price to dilute the seller, etc. etc. - a vicious AIM cycle that needs to be broken soon by a revenue relevant commercial event OR non-dilutive funding (grant/loan/etc.).
I'd argue that Xeros is a globally relevant tech company, consistent with UK government environmental goals here and in emerging markets, etc. I can't understand why it can't qualify for a loan from the British Business Bank or Innovate UK, etc. etc. etc. Good luck!
can tell you haven't been in this stock for long, Redge.....!!
Am loving the enthusiasm but a lot of us have done some heavy lifting in this thing and have yet to see any scrap of reward. Tomorrow is another day and one thing that has not diminished is the confidence in and relevance of the technology.
If you can just find a few thousand other like-minded punters in north yorkshire we might be able to get out of the spiral we're in.....