The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Drifting slowly back to pre FDA levels....despite all the other positive news which followed. Could be Armistice Capital shorting or just general fear about a significant dilution on the horizon - I was hoping we could maintain a higher level of share price to help the impact of a fund raise - but as noted should have traded the FDA spike. Given we are not due to hear a formal Q1 financial update until October - I expect a trading/business update next couple of weeks - and more likely the issue of funding being addressed given the company's cash runway. SB
Interesting info unhooked - thanks - and agreed Vig. To the outside world it appears the EKF is now being run by one individual - Julian Baines - which from a governance perspective for a listed company is completely unacceptable. This is clearly now having a disruptive impact on the company's shareholder base with fund managers not willing to invest given such a regime and even worse pulling holdings. For now Liontrust and Gresham remain large II holders - presumably they are having direct conversations to satisfy themselves there is not more to this than what is evident to the rest of us. The H1 results in Sept provide an opportunity to try and 'reset' the current malaise which surrounds the company - the issue is I am not sure whether our current executive chair has the desire to mend the loss of trust experienced by corporate and private investors here. We shall see. SB
Disappointing that we have slipped away from the recent move into the 60's. SRC appears to be range bound in the 55p - 65p territory. Ironically todays valuation is £402m - the precise amount we bought Nordalk for in 2021. In total the business has now spent £600m on purchases - so we are trading about 2/3 of the 'purchase' book value. Despite broker reports - the reality is the business is trading at about 3.5 x 2023 EBITDA - less than half of what might be expected for a growing business. Expensive debt pile and lack of any return to shareholders despite 8p eps (which triggers 75% of the management team's substantial LTIP share awards end of this year) the main issues imo which need to be resolved before we see any material improvement here. SB
As is the norm here…..what goes up is guaranteed to come down. Doesn’t appear the financial roadshows have done much for investor sentiment. Tricky morning ahead. SB
Just saying it as I see it unhooked. I don’t like being so critical especially given I have a reasonable holding here but until I see actual evidence of an improvement I just don’t buy this transitional nonsense. All the company is doing is upscaling part of their historic operations with covid upside cash. And yet somehow this is classed as transitional and misses all the other red flags which are all too apparent to those who post here and elsewhere. Look at core progress in the last five years in the ‘ hot’ diagnostics space - way below average imo. SB
No permanent senior management team in place which didn’t even merit an update (despite being led to believe one was forthcoming); ever decreasing cash position (12 months ago we were sat on £21m); with 30% of cash locked in Russia; risk that our 2023 PBT no longer covers dividend as no update on FCF; slowing sales in POC (below 10%); cost cutting across the business; no customers signed up for increased life sciences capacity; and what appears to be missed timeframes with commissioning of fermenters. Apologies for negative comments but this update does nothing to reassure shareholders the business is on the correct trajectory - with no acknowledgement on the loss of investor value. Poor. SB
Trouble is - based on previous experience - market is expecting poor H1 results. Firing your CFO added to the previous note that further restructuring costs were coming down the road does not make for comforting reading. To have lost so much value in such a short space of time with a core business that does ok is pretty much unacceptable. I would say the business should be sold but I’m sure that would be a screw up as well. Major shareholders and NEDs should be embarrassed about what is going on. SB
C'mon donmac - its nasdaq friday :-) SB
That's over a week of daily declines in both indices - and now fast approaching the initial FDA approval price spike on the 30th June. Its worrying that there are likely 2 funds going short here with anywhere between 1.4m/1.8m shares to play around with - and with the price subject to high volatility on low volumes its a trading strategy which could hurt short term and ultimately the price at which new dilutive funds are raised. SB
Agree Hawker - although the wider issue here is we are currently operating without a CEO, a CFO (with no clarity why he is leaving after 18 months) and now no one running our day to day US operations. Not a surprise the market has no confidence in ekf at present - despite the positives you have noted. SB
….ever get the feeling someone knows more than you…..ironically on the day Niox puts in a strong performance ekf continues its 2023 horror show. SB
Apologies - I have just re-read the announcements and can see the shares were issued to repay some of the principal - not the interest/coupon on the loan. Mondays eh......doh. SB
Hawker - setting aside the detail (and I appreciate that's not always entirely sensible...) I think the bond works the same way as an interest only 'mortgage' loan with a 5.5% interest rate - so RENX pays its interest annually (in this case by issuing c.526K shares ) for five years and then repays the $21m in 2027. Pretty much what you noted - and a good deal in hindsight. SB
Bear in mind RENX has the option to pay back the convertible debt in either cash or shares, although shares are the only realistic short term option given cash burn rate. The $21.2m bond package has a coupon of 5.5% accrued quarterly , run to 2027 and the original conversion rate was set at a hard floor of $3.62 per ordinary share - however there has been dilution since and there is a price reset mechanism which looks to have been used to lower the issue price to $2 a share. The original issue would have led to a c.7% total dilution - but price was significantly higher at that point. So - in order to minimise the pain we need a much higher price than current.......SB
Looks like the RENX rollercoaster continues! Price is still very sensitive to low volume trades on AIM - which as has been pointed out is an investor disaster zone littered with company carcasses. I can only imagine the BTIG led meetings are warming the market to a future fund raise - good prep, but will possibly hold off any re-rate in the short term. There is always the temptation to sell on a spike - personally I'm still averaging about £2 and that was after some chunky buys sub £1 here so that's a pretty important milestone for me. Don't know if posters here follow RENX on twitter - they had a great billboard advert last week on times square - so the awareness campaign is certainly gaining some momentum with the FDA news. SB
Couple of short plays still hanging around - so they either need to close out or hope any fund raise is low - but major shareholders I suspect will be starting to eye strong returns here based on what has been secured and the significant investment to get here. We hit £1.50 earlier this year post placement. SB
Little bit of context here - Mike Salter joined ekf in 2017, grew the US business, got promoted to CEO in 2021 after baines left (so they must have had a good working relationship) , appears to have been responsible for the ADL purchase, botched covid plan and delays to the fermentation investments allow of which have been very costly to the business and loss of market confidence which resulted in baines coming back (assuming at the behest of shareholders). Mike was then put back in charge of US operations and looks to have finally overseen a successfully delivery of the fermentation operation (still to be confirmed). Probably a capable guy who without the ADL/Covid stuff would have coped fine - but that's not the way it worked out. Its no surprise he is moving on - but looks like he will be there to support the life sciences upscaling for while yet. Business operations aside - the key issue here is the need to get a permanent CEO, CFO and some stability into the business. Expect updates in the next few weeks. SB
It was interesting to see the recent grant of share options to directors included Catherine Coste (190K shares) having just recently been appointed as a non-exec. Few points to note - they seem to have missed out Thomas McLain on the award notification (he picked up around 500K options); I'm 99% certain that Catherine Coste has been appointed as Jefferson River Capitals board representative; and the timing of the award with vesting starting after 3 months (for 12 quarters in total) feels like a 'bonus' for securing FDA which is justifiable and sets a price level (£1.02) above the most recent fundraise (90p a share) which could be regarded as a floor and is relevant in the context of future fund raising. I expect we will see a reasonable rerate soon - but this will be linked to some form of capital raise with a potential maximum c.50% share dilution. Finally - as noted previously - at what point do they go for a full Nasdaq listing. SB
Any ideas what happened to the buyback? Two weeks since any purchase - and plenty of cash left? Could be closed period prior to July NAV? Or something more significant in the background. SB
Good spot Hawker. I hold all three - think you do too. Oryx report out today but no real mention apart from ekf which gets the covid treatment. We are not due to hear full year results until October incl q1 2024 - so by then the issue of funding will have been resolved one way or another. AIM is no longer the right market for Renx imo - same goes for ekf and Vrci……the UK is pretty much closed for business for healthcare tech. ATB SB