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I continue to be more positive on the outlook of their funding options, for example the company could contemplate another convertible bond, which gives them the option of repaying the principle amount from FCF in the future. They could also look at external strategic partner investment, either through CBs, warrants or indeed equity.

It’s not clear to me why everyone only focuses on “dilutive” equity raises, when there are multiple options available to a company like Renalytix.

…a gentle reminder that the Medicare and Medicaid markets remain very much open to Renalytix and KidneyIntelX.dkd, surely now just a matter of time before we start begin to hear about sales contracts and adoption rates picking up. Yes they need to raise funding to achieve this and they have all the data they need to secure said funding, again a matter of when not if… food for thought for the remaining shorts (millennium/armistice), I have added a few more at 75p just now and am off fishing… DYOR & GLA!

…testing volumes at +55% is to end Jun-23 so don’t reflect post period/post-FDA, and I understand the sales have only gone live Sep-1st after spending the summer in training, so one would expect growth to be picking up by the end of the year but perhaps not materially until some way into ‘24, given the need to connect with patient electronic medical health records. The key positive takeaway for me is that once KidneyIntelX is installed as part of kidney care across PCPs that the stickiness will be incredible, and Renalytix very much stand a good chance of becoming the embedded standard of care. Patience therefore required, much more so in this market!

Results look much as expected, given the early stage of sales to PCPs, and I suspect it will all be about what the company says on the call with regard to early sales feedback and to what extent they’re able to introduce any kind of forecasts and forward looking guidance. I have little doubt they’ll get funded by the recent lead investors in the Feb-23 round, and then it will be about who joins in from there… Happy to own, added a few more at 75p this morning, onwards to the call at 1.30pm.

Hard not see this trading over £1 heading into 2024, as the company updates on NIOX Pro, developing US sales and growth in general. Some fund managers have sold too early and others may be taking profits now, let them and then we may well see them return at higher levels as the company continues to deliver strong growth. I see AstraZeneca owns 17%, so one assumes the shares should carry some level of bid premium too, especially once their revs scale to £50m+, especially with gross margin at 73%… what’s not to like?

...I should of course lament the obvious sad reality that there's a distinct lack of institutional buyers willing to step in at said silly prices, however, I do believe this will change significantly once Renalytix starts to give us the guidance we all crave on revenues and testing volumes! Roll on the results then...???

UK Small/Micro-cap has become something resembling a Greek tragedy, come on Rishi, call in the big guns to invest in the ailing UK economy, great opportunities abound!!

I think you're spot on SB, I have monitored this more closely this week and there's often 5k ADRs on the offer vs only 100 or so on the bid, the net effect is the seller is simply trying to push the price down without actually selling any volume, QED. If they were an actual seller they're doing the world's worst job aren’t they! So, net net, I think this appears to be blatant price manipulation. One assumes it is either Armistice Capital or Millennium Partners, wanting to improve their mark-to-market and run over us retail investors in the process.

There's no news to jump on as the company's in black-out until they report results late Sep… I also see short-interest in the ADRs has actually moved up a little bit over the past few weeks and presumably they’ll cover that into the current manufactured weakness. With volumes so light currently, they can almost choose their closing prices can’t they, sigh…

This said, I'm happy buying into the pullback at these silly prices, and let’s see who blinks first..!

DYOR and GLA!

Yes quite, the share price behaves like a call option, so we should expect big swings, hopefully violently up on positive news but then the seemingly inevitable deflating drift back down on no news, such has the norm become with UK micro/small caps, alas… it’s of course still very much binary until we see material revenues as you say SB, so only thing to do is buy, hold and go do something well away from the screens, assuming one wants to be involved at all that is…

I think it’s important to keep some healthy perspective here, firstly, the board is made up of a broad selection of medical diagnostic professionals and Christopher Mills, who owns 10% of Renalytix. If anyone has an interest in protecting their share and ensuring the right type of funding is pursued, it will almost certainly be Mssr Mills. Secondly, the share price rallied from 100p to 130p and has retraced to 100p, admittedly this is disappointing, however it has simply given up the FDA bump, which is only typical of what has happened elsewhere. This is perhaps simply due to the initial excitement followed by the dawning reality that there will be a lead time to realising a material sales ramp. Just look at NIOX and others. Thirdly, the short interest has simply remained constant in the UK, as far as we can see reported, and the short-interest in the US has actually decreased over recent weeks. And it’s worth appreciating that hedge funds running shorts in these types of stocks are basing their strategy, at least in part, that retail holders will lose patience, get spooked, and head for the door.

Patience is clearly required and I suspect the big positive bump is not too far ahead, as once the company’s able to demonstrate material adoption, we can all start extrapolating the huge success that will likely follow…

Until then, the shares can probably only drift and we can endlessly speculate about what might or might not happen.

My strategy here is buy, hold, go fishing, top up on weakness, repeat…

DYOR & GLA.

So the M&A process that kicked off in June has resulted in Danaher acquiring Abcam, for what looks like 9x prospective '24 EV'Sales and 21x EV/EBITDA. Appreciating that it's a very long shot to think EKF may ever be sought after in quite the same way, I do think it wise to point out that the shares are trading on a very lowly and unloved (to use Unhooked's reference) 1.8x '24 EV/Sales and 7x EV/EBITDA. For good reason you may well argue, given the missteps by the board, however, the multiples must surely be tempting for the PE guys looking to invest, grow and sell the business later. Not my preferred route, but the shares certainly need something to trigger a re-rating, sooner rather than later.

It's a thought at any rate...

Well spotted andypa, yes lots of hugely positive catalysts potentially ahead, exciting times!

FWIW, I liken the current valuation to that of a cheap out-the-money call option. The shares are currently implying a low probability of revenue success, and are being valued, quite simply, off the 2025 revenue forecast of ~$24m, then having a simple peer group average revenue multiple applied. It makes sense I guess, as how else to value so early in the revenue ramp process? The key takeaway (for me), is that there's a simple valuation underpinning the current share price, but with no forward expectation of positive surprise, thus the simple cheap call option analogy.

Once we start to hear more about testing volumes, revenues and perhaps any strategic partnerships with the likes of big pharma, e.g. AZN, who have the current leading treatment in this area (Farxiga in the US, SGLT2 inhibitor), then we may well see the forward revenue forecast ramp very quickly and the shares could well follow just as quick, if not quicker, given one may then argue the new visibility justifies a higher multiple, etc.

Food for thought at any rate... DYOR and GLA!

Great to see KidneyIntelX being included in the comprehensive update of the KDIGO 2023 Guideline, this is a further significant validation and an important endorsement for the practical inclusion of the prognostic into global clinical practice and patient awareness.

https://kdigo.org

"Renalytix believes that inclusion of KidneyIntelX in the KDIGO 2023 Guideline would be significant for broader adoption, clinical acceptance, and reimbursement of KidneyIntelX testing for risk assessment of patients with type 2 diabetes and early-stage kidney disease in the United States and abroad. "

I like how this reminds us that DKD is a global problem and that with the recent FDA approval, and the Horizon Europe Grant back in January, KidneyIntelX is fast becoming accepted across the medical and academic world. From this, in turn, we can assume the potential total addressable market (TAM) is only expanding.

https://renalytix.com/renalytix-and-partners-awarded-10-million-horizon-europe-grant-to-advance-personalized-medicine-in-treating-ckd-throughout-europe-and-the-united-states/

Only the short-sighted and market-manipulating hedge funds would be sellers of the shares here.

Thanks SB & UH, all very good points, particularly the CMS meeting date. Interestingly, the latest update on short-interest in the ADRs shows the quantity doubling to 777k by mid-July and then falling back to 463k at the end of July, thus it appears the Hedgies are being opportunistic and managing their risk. Presumably, they now understand the gap-risk profile of this company has clearly shifted to the upside on the expected positive news-cycle. They've essentially traded the lull in anticipated news flow, based on the time needed for the EVERSANA salesforce to gain their initial traction. Assuming the feedback heading into Q4 is positive, the shares could well find the shorters turn buyers, along with II buyers who most all seem to be waiting for the early sales numbers to underpin the shift to commercialisation. As said previously, markets are still in the "show-me" mindset, onwards to Q4 then.

It’s clear the market completely underestimates the significance of the FDA approval and the momentum the team are building, we all appreciate we’re in a “show me” market with respect to revenues, but this is getting silly. Positive news-flow is only just beginning for Renalytix and we’ll soon be hearing feedback from the early adopters now that the Eversana sales team is fully engaged.

Just look at the quality and reach of the clinical advisory board announced earlier today…

Shorting hedge funds have been able to take advantage of the low liquidity to push the shares down, I have personally added more to my position on the back of this and expect a sellers strike is fast approaching… bring on the squeeze!

Thinking the title will change to 'Loved EKF' from Q4 onwards, tuck away and trade some Rolls Royce to keep you busy in the meantime :). Valuation is just silly now at 7x FY24 EV/EBITDA and over 6% FCF Yield, and the forecasts have very little in for Fermentation, so there's plenty of room for positive surprises ahead. This said, I very much agree the board has let the side down here and frankly, one or two heads should roll as a result, and I think the shares would comfortably be back in the 45p-55p range, had they not dropped the ball.

LONDON and SALT LAKE CITY, July 21, 2023 (GLOBE NEWSWIRE) -- Renalytix plc (NASDAQ: RNLX) (LSE: RENX) announces opening the commercial availability of kidneyintelX.dkd™ testing in Saudi Arabia, Bahrain, Qatar, Oman, Kuwait, and United Arab Emirates through a distribution agreement with Vector Pharma. Following the recent announcement of FDA marketing authorization for kidneyintelX.dkd, Renalytix will take advantage of select opportunities to expand testing services outside the US market with qualified distribution partners.

Think this may be the catalyst that leads to the first (of many) material upgrades in sell-side analyst forecasts for Renalytix, interntional is NOT included in any of their numbers as far as I'm aware.

Long upgrade cycle ahead, GMI...!

I say let them short, any such action will only lead to higher price spikes on the likely positive news cycle and sell-side upgrades that are likely warming up, in the event. This said, I fear the activity may be less exciting and is probably just another sad UK small-cap fund manager suffering redemptions. Over to Rishi and Jeremy to inject some life into the UK Pension fund industry, such that one day they remember their purpose of being investors in the UK's economic future!!

Thanks SB, yes this is a very fair point, however, the company has said they have a CFO replacement in the pipe and the US business is very well run, with plenty of bench strength. This said I do agree that it would help if they named a successor for Mike, or at least let the market know if they have a different plan.

What a bizarre overreaction, isn’t it simply the case that Mike Salter, having been removed by the board after his brief tenure as CEO, felt that his fortunes lay elsewhere? Would any of you stay in the job after being promoted and then demoted? (I thought not). Think you’re reading too much into this. The shares are now even more discounted and likely to follow NIOX and track much higher in 2024. Patience needed of course but fermentation firmly on track to launch in the autumn and PoC growing nicely. No debt, 5%+ FCF and a divi, let’s focus on what’s important here.

Strong Buy below 30p.

DYOR & GLA!

Good to see NIOX receiving upgrades from Singer and Investec following the results, positive momentum continues to gather pace and think we see price targets at 100p+ going into 2024. What a recovery from the lows of 2019, onwards and upwards then!