Tough Call for Shareholders1 May 2021 19:43
Evening Shareholders,
When I first took a position on HEMO it was 200,000 at 6p which I considered as a total āPuntā. If I am totally honest.
Obviously, I want a return in the long term, but I considered the investment more of a moral support punt than a serious investment. It is one of nine shares I hold.
Most Bioās with clinical stage products just does not make it, the failure rate is obscenely hight, but you canāt not love what they do. I mean the work at HEMO is truly world class and if any of the six products ever do make it, what a difference they would make to peoples lives.
At 3p we have a Ā£ 13.1m Mcap
The cash burn stands at Ā£ 2.1m loss a Year to continue operations. They took Ā£ 2.5m of the convertible loan facility so that is this Financial Year is covered, and they have access to another 3 years funding. So, they will not run out of money so that is a positive.
If you were in at the Jan 2020 1.8p placing you would be in a good position but if you were in at the later 7p and 5.25p placing or just brought in like me, you are in the Red.
As I see it three factors recently set this back.
1. Global not exercising the license option. Which tells the market that the product is not strong enough and needs more work or just plain failed? Either way No License means no revenue.
2. Mint converted Ā£ 900,000 of the draw down and sold at 3p. They still have Ā£ 1.6m to convert so as soon as the SP picks up, they will dump another load?
3. In less than 12 months IF they still cannot get a license deal to get revenue in, they will likely draw down another Ā£ 2.5 m for the next year.
Had they managed to secure a licence of CDX the situation would now be materially different which is a real shame. As a result, I can understand why share holders have sold.
The tough call shareholders now have is do they stick with it for long term as they are locked in or close it off and capitulate their position? IF I thought results from one of the other five products would come through in the next six months or so and a further draw down avoided, I would probably treble down average on my holding and buy more. As it stands, I do not have that confidence.
I will watch how events unfold, if it starts to look like success on any of the five remaining lines, I will likely add, until then its
Hold for me.
GLA
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