Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
Not sure what to make of todays news (17/11), a mixed set of mostly negative results plus CEO departure a bit of a surprise (at 68). Her 3 year plan seems to have stalled.
I hope I'm wrong - I don't think its going to be a good morning.
Morning,
I think this is a really interesting company which seems to be on a steady path to profitability. Hopefully the results should be well received today:
Excellent H1 FY23 results driven by good performance in all business areas:
o 25% growth in revenues to £98.9m (H1 FY22: £79.2m)
o 39% increase in Adj. EBITDA to £22.1m (H1 FY22: £15.9m)
o 47% increase in Adj. EBITDA excluding fair value ("FV") movement in biological assets to £21.8m (H1 FY22: £14.8m):
§ Adj. EBITDA margin excluding FV movement in biological assets increased to 22% (H1 FY22: 19%)
o 193% increase in Adj. Operating profit excluding FV movement in biological assets to £11.4m (H1 FY22: £3.9m)
o Further reduction in loss before tax
o Operating cash inflow £9.5m (H1 FY22: cash inflow of £2.0m)
Hi Balanced,
good to see you are still here and still following DNL.
The report is well worth reading, I note on the revenue forecasts that Calvine have £10.5m as an estimate for FY 2022, so that's a little worse than the consensus forecast and it requires a 261% uplift in revenues in the second half.
BUT, the report also estimates Efmody sales will go from zero to £6.0m (half year reported £0.39m) and Alkindi should reach £4.47m (half year £1.74m) an Alkindi forecast increase of 156% for the full year seems ambitious but if it's gaining traction amongst children rather than newborns then certainly not impossible.
I think the above is quite ambitious in the current climate - but possible.
But what I do like is looking forward to 2024 and 2025.
We know Efmody is safe and if it's proven (as expected) to be effective in treating AI, then revenues could increase from £4.3m (2021) to £123m & £188m (2024 & 2025), an uplift of 2,760% and 4,272% from 2021. Looking forward, 2024 will also see the companies first profit.
The interim cash burn would be around £27m, current cash being £24m - they need to run a tight ship to reach profit without more funding - which is expected in one form or another for DITEST.
I continue to hold at around 4% of our portfolio. I would be interested as always to hear your thoughts.
ATB
I'm not so sure this meets expectations. Expectations being full year revenue of £9.2m, there should be little difference between H1 & H2 (except organic growth) which means H2 needs to grow organically by 220% to meet forecasts.
Efmody is still 12 months off the approval decision in the US and early growth in Europe is disappointing for the reasons given in the update.
Cash seems to be a little more encouraging, in 2019 they had £9.1m cash, the company asked shareholders for £11.2m and finished the year with £15.4m = £4.9m cash burn.
Most recent cash (now) £24.4m after a placing for £7.5m is a cash burn of £1.5m (enter the R&D credit for £1.5m) = cash neutral for this year.
My calculations may be wrong (from SharePad, previous updates) but a lot needs to change in terms of GP access to meet 220% growth in the next six months.
Newborn babies with CAH (IMO) will continue to be prescribed Alkindi, but growth in Efmody will require GP access and there are so many competing priorities for GP's.
There needs to be a compelling reason to switch adults from their current medication to Efmody for a prescription - in my opinion, at this time, that can only be complications with the current regime.
While the company is cash neutral this update, there will be cash R&D demands from Efmody (for AI) which is a much larger opportunity than CAH and DITEST, which is a bigger opportunity still, but questions remain around how this will be funded.
I am a long term patient holder - any errors above are my own, DYOR. Expect some brokers notes on this update.
Just running through some holdings on sharepad. Since 1st October, major trades (over £30k) amount to £3.17m (or ~3.1% of the market cap), these are mostly classified as "unknown" in sharepad due to the trades being in the middle of bid/offer I guess.
In the last 3 months, sharepad shows the following building positions;
IP Group +100k (shares), Polar +2.4m, Chelverton +1.75m, Pendal Group Limited +8.5m, JO Hambro +8.2m, Richard Bungay (CFO) +19k. I also notice the CEO's holdings have increased to 0.5% of the business, mainly through incentives I believe.
That makes 125.8m shares owned by II's, Management and major shareholders. That's 74.5%! 25.5% free float.
Compare that to DDDD 25% major shareholders / 75% free float, Open Orphan 47% major shareholders / 53% free float.
I'm still holding (5% of portfolio).
Thanks Balanced, looks like they didn't complete the form correctly this time, it appears to show no holding to 9%.
Still, it's good to have an institutional buyer.
ALB
Have acquired 9% of shares without anyone noticing. Despite the poor share price performance, institutions still seem to be taking positions here.
ALB
https://www.edisongroup.com/publication/efmody-launched-in-the-eu-and-uk/29979
Latest coverage by Calvine Partners
https://www.calvinepartners.com/post/diurnal-group-efmody-s-commercialisation?utm_campaign=33c9396a-a320-4810-b073-7489e38374d9&utm_source=so&utm_medium=mail&cid=361b0d21-3561-415f-8921-1bcc20e4c532
According to my quick search, this appears to be quite a grey area, if I am reading it right, the new shareholder must notify the company within 2 trading days and the company must notify the market within 3 trading days.
I would read this as by the end of the day Thursday for an RNS.
ALB
Interesting, a transaction above 3% should result in an RNS, at least 5 of the trades yesterday appear to be above this level - we should hear something shortly, anyone know the rules for reporting timescales?
ALB
Going back to Alkindi, I previously looked at USA, UK, China and Europe.
The rest of the world would be around 85,000 additional CAH cases in kids.
Cash and equivalents is now £34m (20p per share), this has been earmarked for the following;
- funding the Phase 3 trial in the US for Efmody - this should start in Q4 2021
- extension of Efmody for AI which is a much larger opportunity
- development of DITEST
These studies take time, I'm sure the institutional investors are applying pressure to the board to control costs and deliver the expectation (in this update) that the current cash balance will fund DNL to profitability.
The current market cap of £100.5m, is £32m LESS than DNLs peak valuation in 2018. If all things were equal, the share price today should be 78.5p - but things are far from equal, DNL
- has twice as much cash as in 2018 (20 pence per share to fund development)
- DNL has Alkindi approved in all major markets and it is generating revenue
- has Efmody approved in Europe and the UK and will start generating revenues 4 x faster than Alkindi
- has the funding to get Efmody approved in the US
- has DITEST in the pipeline
None of the above was in place in 2018.
I'm not so good at sum-of-the-parts valuations, but this company appears to be exceptional value.
ALB
Hi Scored, All,
I will try to post some thoughts on progress during the day today, although I do need to go out shortly and will resume later.
Keeping things in perspective, this statement looks back by up to 14 months, i.e. trading from 30th June 2020 to 30th June 2021. Think of where we were then in terms of covid and lockdowns. We actually passed "freedom day" after this period - and STILL my GP waiting room is in the car-park under a small tent!
Remember also that Alkindi was only approved by the US within this time (30th September 2020), the challenge is to switch patients from the existing treatments to Sprinkle, in a pandemic.
As a rare disease, I estimate there are around 10,000 cases in the US amongst kids, perhaps 1,500 in the UK, 25,000 in China and 22,000 in Europe (plus the rest of the world). I estimate the annual revenue per child (Alkindi) is around £3,500, so revenue would suggest there could be around 700 patients - so we have accessed just 1.2% of the market in the above countries. Providing patient outcomes continue to be positive, awareness of Alkindi should grow very fast amongst GP's and parents.
The statement said children born with CAH are going straight onto Alkindi, I believe this will be around 600 new patients per year generating revenue of £2m per year (compounding), so in 5 years this will be £10m from births alone. Add GP's switching patients and the 2022 forecast revenue of £11.2m doesn't look unrealistic.
Remember - the above is only Alkindi.
Chronocort / Efmody has only been approved for sale for ONE MONTH during the reporting period. Sales are expected from Q3 and CAH in adult is a far larger market and the outcomes on Efmody are much for patients.
Think logically, we had £2.4m in sales from Alkindi (in a PART year), and Alkindi is used to the age of 17, then Efmody should generate sales 4 times faster (assuming average life expectancy in these patients of 68 years).
PLUS managing the condition in adults is more complex and Efmody provides a key advantage over the competition in supressing harmful androgens.
So, if my ASSUMPTIONS are close, then Efmody should generate at least £9.6m in sales during the first year, which means Alkindi should easily push DNL through the £11.2m revenue forecast for 2022.
I will try to post more later.
ALB
Hi Scored,
I'm working right now but on the surface, I agree with Albinio. The fundraise cash will be needed to get them through the US trial which I believe will take 18 months or more.
I will take a further look later and may post some further thoughts.
ALB
This is how I understand the LTIP - I may well be wrong.
The LTIP awards service if certain goals are met, these are the goals (I now see this relates to an earlier LTIP);
Raise sufficient financing to fund the Group beyond Chronocort approval in Europe (DONE)
Complete a minimum of one licensing deal in either US, China or Japan (DONE)
Ensure that the Group is on track for EMA positive opinion in Q4 2020 to enable commercial launch in Q2 2021 (DONE)
Exceed forecast revenues by 10% or more (Not sure of this one!)
The Management Team have delivered on the above (not sure on revenues) so they deserve to be rewarded.
I think we all agree the Management Team consistently deliver their goals, the tax bill for this award will be significant but they are then tied in to the award shares I believe.
The next LTIP is the one that includes the 100p price target - as I said, this is an earlier LTIP.
I'm quite comfortable with this now.
ALB
Morning Scored,
it's not unusual for management to sell some shares to cover some exceptional costs but you are right, the CEO earns £262,500 and the CFO earns £210k.
I am more disappointed that they management team has so little skin in the game, DNL market cap is £109m, the CEO is holding around £637k worth of shares (0.58%)
Richard Ross (CSO) has a more significant holding worth around £1.4m (1.34%).
But, what is interesting about this RNS is that it relates to the Long Term Incentive Plan (LTIP) which was announced in December last year.
I struggle to understand exactly how these arrangements work, but I believe there is an option to pay income tax in advance (this minimises the tax bill on future capital gains)??? Why he needs to sell shares to meet the tax bill, I'm not sure - but assuming they are issued on meeting the LTIP criteria of 100p a share, then his tax bill could be at least £146,700 on £326,000 of shares. When you consider his salary is taxed, his take home pay could be around £150k - perhaps this explains it??
The more important point is that we haven't yet met the 100p criteria. I believe the LTIP is still aligned to our interests - and after doing this digging, I am not too concerned.
Is there anyone here who understands LTIP arrangements who could better analyse this situation?
ALB
Sorry, my mistake!! Dated last month 3rd June!
Tomorrows news today! Additional research dated TOMORROW.
https://3955fac3-6193-423f-8049-efaec828a8db.filesusr.com/ugd/a182dd_8be7dec679a940d89505bdf002fa79fb.pdf
The MHRA's approval of Efmody this morning represents another important endorsement of the strength of the data supporting its efficacy and safety in patients with congenital adrenal hyperplasia (CAH). The availability of Efmody in the UK fleshes out the adrenal franchise. Efmody provides a hydrocortisone preparation that mimics its physiological release, thereby better-controlling complications of CAH, including overnight androgen build-up and the risk of life-threatening adrenal crises. Additionally, it should deliver operating leverage to the UK operations. As we have highlighted previously, we remain optimistic regarding the rollout of Efmody in Europe and the UK, given the already well-established commercial infrastructure and look forward to details of sales progression after launch.
The positive news follows the successful EU approval of Efmody in May and allows Diurnal access to a combined $250m market for Efmody.
Diurnal has a robust balance sheet and commercial opportunities of approximately $350m in Europe and the US for already approved products. This strong position allows the restart of Efmody’s US Phase 3 development. We believe that lessons learned from Efmody’s European Phase 3 study significantly improve the chances of US success. In addition, Efmody already has Orphan drug designation for both CAH and AI in the US, which provides extended exclusivity and a potentially enhanced market position.
We think that Diurnal’s current valuation overlooks the prospects for Efmody in Europe and the much larger adrenal insufficiency opportunity. In Europe alone, AI represents a $1.8bn market opportunity for Diurnal. With Efmody now approved for CAH in Europe, the regulatory pathway for AI appears uncomplicated, and Diurnal intends to conduct a comparator study with incumbent Plenadren for optimal market positioning. All going to plan, we would expect Efmody AI approval in Europe towards the end of 2023.
We calculate a DCF based fair value for Diurnal of 241p per share, which compares with a current share price of 69.5p.
Hey Aim, I think the whole market has been quite flat since April / May, volumes in general are low and my PF is going nowhere fast, I was 21% up for the year in April, I'm now only 15% up year to date.
Considering the placing, I think DNL is doing ok, but sooner or later it needs to put in some gains. Loads of news to come.
ATB