From Nigel sommerville7 Jan 2020 16:20
When I first commented on AIM-listed cancer drug developer ValiRx (VAL) back in 2016 the shares had just seen a pump’n’dump which pushed the stock up to 21p before a placing at just 12p. Now the stock is just 0.1p and on a market cap of £0.9m (source: ADVFN): never mind the 90% club, this is a fully paid up member of the 99% club. And now we have a placing for just £200,000 gross…..and Broker number three joins the fray, although as Tom Winnifrith points out the RNS will have to be reissued. How on earth can you justify paying three broker retainers for a company worth less than a million pounds?
That tells me that there is gross largesse going on here, which perhaps explains the share price decimation. But it also suggests that the market really has had enough of ValiRx, for it seems that even house broker Novum was not able to supply the cash, and the company has appointed ETX (except it hasn’t….) to add to its crony capitalists list.
And with the placing having been done at just 0.1p and all it got was a measly £0.2 million before costs (and I’ll bet they were more than 5%), basically it looks as though nobody was interested. Or at least, not at 0.1p. But 0.1p is the par price of the stock, so raising any more would have required a General Meeting to approve a share capital reorganisation to get the par price down and perhaps attract a few more bucket shop spivs at a far lower price.
At its last results, interims to June, the company reported a pre-tax loss of £0.9 million which included admin costs of a stunning £865,000 as against R&D costs of just £207,000. So the latest fundraise won’t make any real difference and the main beneficiary will not be in the R&D department! And the interim balance sheet showed net current assets of MINUS £56,000, since when we have seen a placing to raise £350,000 and now another £200,000. Well, by my maths that is heading for enough to cover two thirds of the losses during the second half. Is the company actually solvent right now?
Well, of course, it could be – if the directors have a reasonable expectation of raising more money. So for use of proceeds, should we scrap the stated reasons as follows:
The net proceeds of the Placing will be used to analyse the Phase I/II clinical trial of VAL201 to treat prostate cancer and associated metastatic conditions and continue the development of ValiRx's pre-clinical VAL301 and VAL101/GeneICE programmes towards the clinic, and for general working capital purposes.
And just replace it with:
The net proceeds of the Placing will be used to cover the costs of effecting a capital reorganisation so that our long suffering shareholders can be further fleeced as the company tries to raise yet more capital to waste on corporate hangers on and crony capitalists?
Nice people, beating cancer is laudable but as an investment this is I’m afraid, a sick joke.
Sign In
Follow the stocks
