The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Given our recent discussions about expansion I suppose it's hardly surprising that we've had a fundraise. Always a bit of blow to see the sp sink towards a discounted placing price but at least we can be fairly confident that all this money is going to be spent towards delivering on big new contracts - and at whatever timeline you look at, the business will only thrive if we can do what we promise in a timely manner. So I hope no-one is put off by this drop - it looks an obvious requirement for future growth.
[Warning: lightweight anecdotal investing report follows - please feel free to ignore]
So, when I found this company around six years back I was really fascinated by the idea of investing in it and in its portfolio companies as they listed. A great way to support British innovation and make some money along the way. A few years on, the companies I backed were really not doing so well - a reasonable gain for Ceres Power was heavily outweighed by big losses at Modern Water, Tissue Regenix and Xeros (though the latter two at one stage had more than doubled for me).
I've sort of got faith that overall these will come good but I was prompted to play a little game and about 6 months back created a fantasy portfolio of eight other listed IP Group portfolio companies to see what happened. The short story is that the fantasy portfolio fell rapidly by 20 per cent, but in the last month has climbed back and recouped those losses and is now nearly level.
Within that, the story is of substantial falls for Diurnal (“development of a novel approach to drug delivery”), hVIVO(“viral challenge and virometrics specialist”), Mirriad Advertising (“native in-video advertising”) and a smaller loss for Deep Matter (“ONTO and Visarc surface modification technologies”), which have been counterbalanced by big rises for Avacta (“diagnostic tools, consumables and reagents for life sciences”) and Ilika (solid state batteries). Actual Experience (“cloud-based analytics as a service”) and Ixico (“support technologies for researching and treating serious illnesses”) have remained pretty much the same.
So what have I learned? That early stage AIM companies are volatile. That a portfolio helps cover your losses. In other words, nothing I didn't know already. But at least I've got some confidence that small, tech-led companies can be profitable as well as uplifting and exciting. All you have to do is pick the right ones.
Well true but not the whole truth. The SP fell to 10p, at which point we all had a chance to load up - I doubled my holding - and it has quickly doubled to 20p, which was good news of a sort. The point about cash burn remains pertinent though.
University academics? Marks Nicholls and John Samuel? I think that will be news to them. Look, I'm just some chap on a forum and know little about building a business but the bulk of the research costs are largely sunk now (its nearly 13 years since the spin-out), and the whole Symphony project thing is to get away from heavy capital costs (hence the board's "IP-rich, asset-light" mantra). There's reasons to think they can do it - and the nous of university academics is not one of my worries.
Well let's hope so. I was glad when he turned to the recruitment programme because I was thinking we would struggle to deliver if all these larger, complex projects came in. Must be hard to get that right - no-one wants to pay people to sit around waiting, but if a £100m project does arrive, we need the engineers in place and ready to go.
Well now I've seen it, it 's very exciting. Since first I invested here people have complained about jam tomorrow, but if only half of the systems business jobs Simon outlines come in, then our bread will be very nicely buttered. If you can't be bothered to watch it, that would be around $150m - or nearly three times our mcap.
Erm well it's nearly doubled in three weeks. Is that what "junk share" do? Maybe, but the only real answer is to look through its history and read the documents. I'm not going to do all that for you, but briefly - this is about disruptive technology with all the associated risks. It was ludicrously overvalued at 300-odd and was incomprehensible o me at 10p.
The company is trying to shift towards a licensing model - if it can expand and then move beyond the hotel market and into domestic then 20p will be very cheap. If the tannery side takes off then we'll be worth a whole lot more too.
It's a serious business - and the ever-increasing concern over water is a big reason for being involved. It may or not take off big time but it has already come a long way. It's a proper business, so junk share is hardlyvan appropriate term, but yes risky. I think 2020 will be a more exciting time than 2019 - so a good time to get in if that seems right for you.
Good news from Diurnal today. Currently up 186 per cent on today's RNS about a US patent - though strangely the company is saying they know of no reason for the rise. This comes after a fairly precipitous decline in recent months - but we own 43.6 per cent so my back-of-envelope suggests our gain today is very nearly £10million. Now, if TRX can take off...
"any descent is seen as heresy. " Yes, ridiculous isn't it? Descent should surely be what mining stocks are all about.
[Wouldn't normally make a joke about typos but , y'know, open doors and all that...]
September's figures showed by we'd got about 12 million in the bank with about £4 million cash burn every 6 months. With revenue increasing at 61 per cent (at least, hopefully) that should just about take us to our 2020 breakeven stage but it could be close and a fundraise is an obvious possibility. If I had any spare I'd definitely be averaging down here - I could have more to invest by April but I doubt we'll be 6 or under then.
Tremendous piece about Greggs and British society here - proud to be long-term holder. https://www.theguardian.com/lifeandstyle/2019/jan/07/greggs-vegan-sausage-roll-brexit-britain-culture-wars?fbclid=IwAR3Sk8yrVya1VapsfdEhsXZuYnWLmFyJrlwN_NIQttzDVjskjv4ZzHVA6Z4
Fourth quarter/Christmas trading figures tomorrow. The fact that we're up £1 already this month makes me think the market is pricing in some fairly splendid numbers. So maybe we should be prepared for a fall if they are not quite as good - but whether they are very good or not quite as good as some had thought, I'm very happy with the way things have gone over the years here and expect a continuation of the nice divis for some time to come.
"Hahahahahahaha. I knew it. BBC right-of-centre = palatable, non-tribal leftism." Prime gammon - confronted with a fact he doesn't like, he'll just move the goal posts. And allegiance to a croaky old concept such as IQ shows this fellow's irrelevance even more. Anyway welcome Ms Shaw - hope you enjoy the journey.
I can't quite believe you are moaning that 11 months after launching a domestic machine using completely new technology at a trade show, we have not gained floor space at Curry's. As for your anecdote about your 'local suppliers' - did you really invest here thinking that brand awareness in Belo Horizonte, Tamworth or Dortmund would rival Zanussi by the end of 2018? There's plenty of challenges facing Xeros, as having to fundraise at 10p indicates, but give them a bloody chance.
I'd hope that the markets would place as much credence in what he says as the rest of the world, but this is a worrying drop now. I kind of hoped that this being predominantly a US business right now, we might be a bit insulated from the fears around Brexit omnishambles.
Maybe a obvious question and maybe there's an obvious answer, but why would they fundraise at 10p? Do they really feel the institutions wouldn't have been interested at 28? 25? 20? 15? I'm reluctant to believe this is simply selling it to mates at rock bottom, but maybe I'm just naïve.
Course we're interested. It's just when you are trading at around one sixth the price of this time last year, it's hard to get over-excited about small-but-welcome announcements. I'm still confident the business is a good one and in the medium term am excited about making money. But there's still a way to go before we see major movement. Happy to be put right if anyone thinks this is actually a very significant step on the road to mass licensing.
A £50m investment from Amgen into Oxford Nanopore - that sounds like one considerable vote of confidence. It's cheered me up after the Diurnal disappointment and the continuing XSG doldrums. That's the thing with investing in this company - there's always so many ups and downs coming at us as portfolio companies grow or flounder.