RE: France Launch17 Sep 2023 10:28
Woof,
A well-considered post. I hope that does not come across as patronising.
Indeed, an MN deal involving an upfront payment worth c£3m would ease concerns from people like yourself who have pulled up a seat to sit on the sidelines with a watching brief. It is all about one's comfort with the level of risk, and SBTX carries risks you rightly highlight, as have I.
Stuart recently stated we would never rule out a fundraiser. However, like you, I do not see an MN deal being signed off with a wad of cash before the study results. This leaves AxisBiotix -Ps sales building steadily with a c80% retentions and Croda revenues, which I believe will be as early as the end of Q1 but likely to be H2. If this is the case, SBTX should not be required to come back to the market to raise more funds. You said it yourself: the market controls the cash, and SBTX had no problems raising the money when there was plenty of evidence other Companies, including OPTI, could not raise what they wanted, and if they did, it was typically at a significant discount. Croda is a very useful indemnity if you need to raise cash. It's likely to be less than the prior £3.5 gross, and a door could open for SBTX to request an advance from Croda sales. I must be clear: Stuart never floated this idea in our conversations.
The fact that SBTX raised what it wanted at a minimal discount is quite telling, be it from someone who may be wearing rose-tinted glasses. Stuart and Manprit will have been in detailed discussions with Croda before crunching the numbers.
No mergers or acquisitions appear to be completed before the Croda launch. The small team led by Stuart is working tirelessly, and it is more of a matter of time constraints than anything else. The primary focus seems to be on the study, oral care, and Croda. During the interview, it became evident that mergers or acquisitions are unlikely to involve cash or shares but could potentially include a mixture of CLNs, asset debt, and shares. Additionally, the deal must benefit the business overall and be accretive.
The territory expansion of AxisBiotix-Ps also helps the MN deal, as a regulatory pathway has been established in a post-Brexit world where we are led to believe Brexit Britain is doomed.
Based on my understanding, SBTX had £1.2 million before raising £3.5 million gross. The company's cash burn is decreasing and is expected to be below the c£200k monthly. In my opinion, I don't think the company will need to raise any more funds to continue its existing business strategy. The launch of Croda has significantly changed the risk landscape, and I believe it will bring high volumes from a range of high-profile household names rather than just the soft launch we saw with AxisBiotix-Ps.
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