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Robins, I understand but it is NOT game over (yet). Imagine if today's presentation happened at the AGM! At least now we are prepared for the AGM. Let's not forget that there is a lot of evidence that the 4D platform works with all the diverse programmes! SO IP should have a lot of value, whatever that is.
Let's give management and Duncan especially some benefit of the doubt and see whether we could have a productive two-way discussion at the AGM.
It would be great if you could make it at the AGM - if there is a chance.
Hi Robins,
I sold a bit of my holding shortly before the presentation as the SP was rising - I thought there was a good chance it wouldn't be up to scratch . Well that good chance not only materialised but it was much worse! Presentation was very unprofessional: you see many startups giving much more sleek presentations, with better content and projecting more enthusiasm. The ones that are founded by more technical guys who are less familiar with business aspects are much more willing to listen - unlike Duncan.
I am a big supporter of "invest in people not in product" but here I didn't follow it.
Re the rest of my holding I will probably wait for the presentation - hoping to make it and see whether they will still avoid and evade questions.
Can I reverse the question? :-)
RustinCohle
The irony is that by proposing res 9 (eliminating the rights of existing shareholders) the CEO and the Board are trying to eliminate one of the main reasons to stay around: to buy shares at a rights issue where the existing shareholders have the right to acquire shares at an advantageous price.
After a presentation with so many beginner's mistakes in terms of content, structure and clarity (even if we were to ignore delivery) and failing to address/ignoring fundamental questions, the main reasons for investors to stick around would be:
(a) the increasingly strong possibility of management change (investors and staff / scientific team must be feeling let down),
(b) the rights issues assuming Res.9 gets rejected
(c) an unexpected piece of good news.
(d) share purchases by directors.
Maybe there is a reason that IIs haven't been lining up to invest. They would insist on having a proper business plan in place not an ad-hoc management style. If they do come in one day, sooner or later they will insist upon change of management.
Unimpressive presentation and Q&A.
Let's start with the positive: good to mention the vaccine collaboration with MSD. It must be alive. Also the MSD relationship has been reiterated though nothing new or specific about it.
In the presentation, hardly anything / nothing on business model, ability (or the lack of it) to attract IIs, specific short or medium term commercial milestones.
Even in the Q&A, the question as to how revenues will be raised was answered in a very general way. Re the answers to the few key questions that were discussed: it was as if they were given by people who are not insiders - let's hope at the AGM questions will not be evaded or avoided.
Now, we don't want a CEO to deal with a low SP: we'd like the CEO and the Board to address the issues that affect it though and step up commercialisation efforts. We'd have liked them to have spelled out a credible strategy and business plan with timelines!
Presentation sounds more like an explanation as to why the company is asking for an ability to raise 100% capital and a (poor) attempt to reassure investors. It was not a pitch to inspire existing or new investors.
Unless key questions/issues are addressed, for me 4D has become a gradual "exit" investment.
I believe Duncan is not suitable as a CEO - he may well be suitable for another role within the company but in my opinion, such role should not be customer facing, investor facing and job definition should not involve writing presentations.
For me, the presentation tomorrow will be critical in my decision as to whether increase or decrease exposure in the short term (and to what extent).
I have asked some pretty direct, but I'd like to think fair, questions which I posted last week: the intention is MORE to ensure that management have a CREDIBLE PLAN with CLEAR OBJECTIVES mainly on the commercial and funding fronts (the two are related), as well as on the clinical and the regulatory aspects - it is LESS to seek answers that will be revealed in due course by RNS.
Having said that I'm sure most of us will be looking for hints as to how things are going or approximate timing that information will be revealed.
If the main investor questions are not sufficiently addressed and the content of the presentation is pretty much self-justifying, recycling of information we already know and trying to give us explanations as to why dilution is necessary, it will signify a haircut of my exposure to 4D.
If however, it is a positive forward-looking presentation aiming at engaging existing investor base and expanding it, then I'll probably buy more.
Yes, biotech sector is in doldrums but if you are suggesting that we remain invested you'd better show us why! Management still need to "sell" the 4D opportunity to existing investors as they do to new ones!
Frankly, I'd very much welcome even a very low ball offer to get started with. To be more specific, I think that an initial bid even at as low a level as 45p should still be excellent news for shareholders. I'll explain why by the end of the post.
This is a company with a proprietary platform which has delivered tangible results in terms of clinical benefit in at least three areas: IBS, oncology and asthma. Even in Parkinson's there are early signs to justify moving to phase I. Of course there may be fine tuning required of the platform in each application and, it may be, that some programmes will not make it to a successful phase III or completion. Yet, the technology has been proven to a significant extent and there is something there!
And are we saying this company has a market cap of £50m?! Even, a multiple of that i.e. three to four times that would be too low. And that's in current market conditions, let alone in normal conditions. Seres Therapeutics whose shares have been battered to incredibly low levels has a market cap worth more than 4x that (c. £215m). Seres has one programme that could enter the market soon but 4D beats Seres in terms of diversity of therapies. Furthermore, the markets that 4D could potentially address dwarfs those of Seres in terms of market size.
I'm confident that were we to see a takeover bid in a low range e.g. 45 to 100p, we'd also see more bids triggered by other parties and/or higher ones by the original bidder (as the first one would most likely be rejected). Let's not forget the market cap even before the IBS results was c. £200m. Yes, it was a different market but, still it is an indication.
However, a bid may happen on the off-chance. Other, more likely triggers that should leverage the company's value very significantly would be:
(i) extending the runway of the company by a few months. The cash burn of the company given the diversity of its programmes is quite low. A relatively modest amount of funding (e.g. OF facility drawdowns or fundraising) should give a few extra months of runway beyond Q4 leading us into more normal market conditions AND giving the company a chance to conquer more clinical milestones.
(ii) diversification of the investor base by bringing in IIs.
In a period that is expected to be busy with catalysts, we could and should have milestones on the clinical front which could work synergistically with (i) and (ii).
Very much looking forward to Tuesday and the AGM meeting. Whilst I am not expecting news, the presentation and meeting management should be very enlightening re the prospects of the company - one way or another.
More like a Darth Sidious but not as subtle and with an interest in LBPs :-)
Sangi, have you not bought back in yet?
Given the market conditions, what should take precedence, above all, is to ensure that the company is going to weather the storm. To that extent, I think the priority should be to ensure runway extends well into Q2 2023 instead of looking into medium term financing options. In other words the objective should be about 6 months of additional runway.
Until then, things will have, hopefully, settle down a bit or a lot. In nautical terms, when you are in a storm you try to find a quieter bay rather than seek to reach some of your destinations come-what-may.
Assuming the company has indeed been looking into such smaller/bridge financing, it would have plenty of options: liquidity line from MSD or others, partial sale of rights to Blautix, co-financing partner in joint 0518 trials in exchange for some future rights, Oxford Financing drawdowns (just one step way from meeting the second d/d conditions) or a fundraising for a relatively small amount.
Even if it came down to a fundraising through a capital increase and assuming it was for a manageable amount, it would be much quicker to arrange, under less onerous terms and less dilutive.
The above thoughts are with the caveat of looking at things from the outside. I'm hopeful that the financing situation question will be addressed in a way that is to reassure investors at the conf call on Tuesday and at the AGM!
Management has actually a lot of indirect control over the share price through funding strategy (dilutive or non-dilutive raises, timing of fundraising, maturities of any loans) and by being successful or not in having a diversified investor base (the more you rely on PIs, if you fail to bring in IIs and the more short term investors you attract the less resilient the SP to downturns). Also management can determine how successfully funds are spent and therefore influence value creation which in the medium term should be reflected in the price.
Finally telling investors not to focus on the share price of a company they re invested in doesn't make sense.
continued from previous post, Questions 6&7
Pre AGM-Investor Presentation and Q&A
21st Jun 2022 at 10:00am BST
Q&A
Question 6:
Does management and CEO in particular, think that Yes votes re proposed resolutions 2 & 3 are justified prior to delivering shareholder value? In fact, shareholder value has been dramatically eroded over the years: yes the conditions in the last 12 months have been difficult but what about before the last twelve months? IP & company value creation seems to be happening at slower pace than dilution via funding rounds.
Question 7:
R&D
(i) It would be very helpful to have an update on the vaccine collaboration with MSD. Is it likely to result in a commercial milestone?
(ii) Also, re 0518 & Keytruda trial:
(a) in the Feb 2021 RNS there was a mention of "targeted tumour shrinkages" in part B patients. So does clinical benefit in RCC, or other indications, still include those?
(a) are patients with a biomarker still monitored re potentially better responses?
(b) as we are well into part B, a comment as to how indications other than RCC are going would be very much appreciated.
That's it! Have posted the final version of 7 questions as they were submitted. The intention is to engage with management in a productive discussion!
Herebelow:
Herebelow questions submitted already in case others want to
Herebelow questions I submitted in case others would like to reiterate any of those:
Pre AGM-Investor Presentation and Q&A
21st Jun 2022 at 10:00am BST
Q&A
Question 1:
Why does excellence on the clinical & development get almost muted when it comes to the investor base? The company relies now exclusively on retail investors. It doesn't make sense and especially given the stage 4D is at. The share price and the business suffer as a result of not having managed to attract anchor institutional investors. The biotech market hasn't been booming, granted. However, it is far from dead - there are many funds out there that are investing - and 4D should have strong credentials to get in front of the queue when pitching.
Question 2:
What is 4D's business model i.e. how is the company hoping to bring in revenues by capitalising on the most advanced or any of its programmes? Please list the company's targeted commercial such as joint-ventures, licensing or earning royalties and give an indication of timing.
Question 3:
It is very disappointing to investors that there has been no IBS commercial deal after ... 2.5 years of phase II conclusion with strong results (as we are told by the company itself). Are we going to wait forever for the FDA? Given the importance of getting our hands on non-dilutive funding, can't the rights be partially sold to a bigger industry player who can then pursue regulatory approvals. It would appear that 4D management needs to be a lot more proactive with IBS.
Question 4:
Can we have a much more investor geared presentation especially since we are targeting institutional investors (otherwise what's the point of the Wainright conference)? The current version which is updated every couple of months is like a crammed scientist's book. Yes it is important to explain the clinical programmes (much more clearly). However, the targeted commercial milestones are conspicuous by their ... absence. The targeted markets are not mentioned, let alone explained. What are 4D's USP (unique selling points)? A punchier, investor-oriented presentation is badly needed.
Question 5:
Are we indeed close to satisfying the Oxford Finance conditions for the second drawdown? Given the collapse of the share price and the lack of success in getting institutional investors on board in the last few years, it is crucial that the company succeeds in obtaining non-dilutive financing.
(CONTINUED: Questions 6 & 7)
@Porky9
"Shorters calling for 25p, 20p, 10p, 1p FAp, cash back on shares..... Oh please, it all needs buying back at some point"
Not sure we are looking at shorters at this stage or even that we have been for some time. Instead, we are probably looking at desired entry points - by the way, claimed entry points are always much lower than actual ones!
This morning's RNS must have come at a disappointment though to the group of entry seeking posters. After all, they were encouraged by 4D's long silence. Is MasterB or their boss among those seeking suitable entry points? "The team" or Le boss appear to have already revised alleged target prices upwards, as Phil has observed :-)
So, in this case, let us ask 4D for the specific milestones - as you say commercial as well as medical & regulatory - that are being targeted? By medical, trust you refer to the way that 4D is going to plan its trials so that they follow the fastest route to potentially being adopted as golden practice.
I'd also like to know, what is 4D's business model? How is it thinking of earning its revenues?
Furthermore, the R&D is doing very well but it's not a done deal: for example, is the plan to focus on the patients with the biomarker or on other specific categories? If so, what purpose would that serve and what work is happening on this front?
But again, I'm very pleased that 4D is being proactive and is willing to have such conversations with investors. It is a very positive sign that the company is alive and kicking!
What will be a key determining factor potentially leading to a major influx of funds to 4D, is a nod as to the likelihood that Oxford Finance loan conditions will be met. It's a tricky question but there are ways of answering it in an appropriate fashion. It could be for example stated that negotiations with OF are going well or that we are close to satisfying the conditions.
Specific progress in attracting Institutional Investors including the creation of a presentation that is 100% geared to attract them, should also be at the heart of existing investors questioning I'd like to think.
Finally, just in case people wanted to put forward any of the questions, I'm reposting my questions as of 8th of June that seemed of general acceptance:
"Certainly a lot to answer at the AGM. In a nutshell:
- why does excellence on the clinical & development get almost muted when it comes to the investor base - the company relies now exclusively on retail investors which doesn't make sense for the stage it is at; The biotech market hasn't been booming, granted. However, it is FAR from dead and we should have strong credentials to get in front of the queue when pitching.
- why no IBS commercial deal after ... 2.5 years of phase II conclusion with strong results (apparently)?!
- why the very significant pay rises and the options for directors (not questioning the ones for the staff) without concrete results on the commercial front?
- does the current funding strategy involve plans to have big partners foot the bill OR are retail investors going to be funding R&D that is important for MSD ... and other big pharmas?
- can we have broker reports explaining clearly and in detail the clinical programmes, the general 4D strategy, the financing plan and targeted commercial milestones? "
What a nice surprise and clever initiative. Have not heard of something similar before!
I'm as pleased about the fact that they seem determined to "face" and engage with investors and potential investors (as they put it) than about the opportunity to put to management questions that would be raised at the AGM.
It doesn't mean though that the questions asked will be any less challenging. However, the idea is that we have a productive meeting whereby management hear the issues brought up and investors understand the company better :-)
This company has a compelling story to tell. Let the market understand it better and benefits will follow!
ASCO reference was to:
Oncology Conference: 2022 American Society of Clinical Oncology (ASCO) Annual Meeting - Chicago June 3-7, 2022.
I read by fluke on Twitter (account by @Prassas a biologist) that the presentation of results from a clinical trial involving a drug called Trastuzumab deruxtecan received a standing ovation at the ASCO conference when it demonstrated six month overall survival in patients with metastatic breast cancer:
Tried to look information for ASCO and the drug Trastuzumab deruxtecan and one of the articles that came up was:
https://dailynews.ascopubs.org/do/10.1200/ADN.22.201047/full/
“Trastuzumab deruxtecan improved median progression-free survival by 4.8 months and median overall survival by 6.6”
Even though we are talking about advanced cancer and patients refractory to certain treatments in the above case and RCC patients in 0518 / Keytruda trial, it's still not exactly comparing apples with apples. Yet, we see one more piece of evidence of the importance of 6 months survival: in the case of RCC patients in the 0518 trial we have 4 out of 20(!) so far who had become refractory to other treatments!
On 23rd of March when the RNS came out, I said that 0518 is here to stay. This view I've had has only been reinforced. 0518 must be in MSD's radar screen as RCC is one of Keytruda's main applications. Therefore, commercialisation shouldn't be too hard and neither should be the sourcing the funding... one could be forgiven for thinking.
No cloud without a silver lining. Hopefully, 4D has got or will get soon the message re trying to be more communicative with existing investors and much more proactive in hammering out (or spelling out) a sound commercialisation strategy AND communicating that to the market and especially putative IIs.
Crl makes a good point: the overall market reaction is premature. Fuelled by the l(partly) emotional, but justified, reaction of investors, some speculators seem to be taking positions to take advantage of that. I say “justified” because the inclusion in the Notice of the resolution re up to 100% dilution was clumsy: it could have been explained to investors instead of slipping it in the notice and hoping that it gets approved out of apathy - all the more because the SP was at very low levels.
Now, it may be a good idea to forward to IR the questions /issues that I suggested be raised at the AGM adding a few that others have raised. Also, we could suggest a much more investor-geared presentation resembling less a crammed scientist's notebook :-)
As I’ve said before, we have all the ammunition and the credentials to tell an excellent story to (putative) IIs. The difficult bit, i.e. achieving milestones in the clinical work, has been done and is on-going. Focus should also be - in parallel- on the “easier” task of producing the right pitching materials AND explain the business and commercial side of the 4d story.
Hang on a second! The team has just been to Wainright global investor conference with biotech one of the main sectors represented there: I know the 4D presentation was a little underwhelming but ... SURELY there must be some live follow-ups after that!
What about our runway? We still have funds until well into Q4 i.e. so for say five more months.
Therefore there is time so let's look at the positive side of things: there is plenty of time for few pieces of good news concerning the raising of non-dilutive funds (Oxford Finance?) or funds involving some reasonable dilution OR, good news on the clinical side (e.g. re NSCLC in 0518 Keytruda trial) which, in turn, could facilitate the raising of funds, finding a strategic investor / industry player to take a stake, encourage co-financing of main programmes by an industry partner.
Such events may extend the runway of 4D by a few months if not by much longer in which more milestones may be achieved.
In any case, you would think that the Board would have something up their sleeve between now and the AGM. So … it’s good that we’ve been rather noisy recently but let’s see how the 4D story unfolds in the next few weeks. We still have time . Roll on AGM!!
I'd be quite concerned if the Board of 4D shared the view of the company as (mainly) a research institution ignoring or even underestimating the commercial side of things.
Having an IP (intellectual property) focussed model is perfectly valid for a biotech which is going to generate revenues some years down from its inception.
Nonetheless, it doesn't mean you underestimate the commercial side of things such as engaging with IIs, building JVs, chasing licensing opportunities and, very importantly, bringing in the right type of investors alongside your retail investors who are also important. I believe that is what the Board have got wrong: the presentation says it all. It is like a crammed scientist.s notebook rather than a pitchbook - are they really hoping to attract II investors in a buyers' market?! Not many punch lines exist and the commercial targeted milestones ... are absent. Also, to follow the presentation - an an existing investor - you need a lot of patience to navigate through jargon and acronyms and even then you only get the gist. Again, is this 4D's idea of a pitch book to busy investors?!
In what is a buyers' market i.e. quite a few companies compete for limited funds, 4D's presentation does not have a single page (!) about:
- business model. How is the company aiming to earn its revenues? How can 4D capitalise on the collaborations? What is the best outcome for programmes that come to a successful conclusion of phase II OR even show many promising results in the course of phase II?
- what makes 4D different from rivals (of which there are plenty)?
- what are the advantages of 4D's programmes (apart from the safety aspect)
- funding strategy: how is it going to fund the creation of its cash-hungry IP? How much of that will be dilution, how much non-dilution?
- what's in it for IIs? Specialist but also general investors that include biotech under their umbrella should understand what it is to be part of the 4D vision (to use some jargon!)
In my view there has to be a change of mentality. Directors need to be a lot more PROACTIVE. The approach we just do research and we'll get noticed and deals will just happen isn't the way forward. Otherwise there is a serious risk and a dwindling group of retail investors continue to fund the business!