The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
£250m - yes that’s correct £250m - of shareholder value lost in less than 18 months - 2/3 of the business valuation. Even discounting for the covid boost that’s still absolutely dreadful. Incredible corporate mismanagement and all triggered by a badly concocted RNS with no follow up reassure the market. SB
Based on the latest available info on the company's cash balance ($31m at 30.09.22) and likely cash burn of c.$10m a quarter, the £20m placement provides funding for Q1 and Q2 of our 2024 fiscal year ie the second half of calendar year 2023 up to 31 Dec 2023 (obviously if sales take off this year we will be in a better place).
Reading the Placement RNS again there are two interesting points to note. The first relates to the 'Registration Rights Agreement' entered into with Jefferson - I am not familiar with these 'rights' so had a look - and it appears to mostly grant early stage shareholders (in this case it would be Jefferson) in private company's with certain rights when that company is made public via an IPO. As we know - RENX is already a public company traded on two exchanges (LSE and Nasdaq) so I wonder what these 'rights' are for. Could it relate to a wider plan to raise further capital later this year once the company is derisked further (FDA, Medicare, Revenue increasing); and the $20m is to support the company get to that position - and provides Jefferson with an early return - possibly with a full nasdaq listing given they now hold 8% of the business. Jefferson can also appoint a director - which ties in with the reference about the need for more diverse representation on the BOD - perhaps alluding to a more commercially/financially focused team who could navigate the company's growth plans. If anyone else has any knowledge on 'Registration Right's' jump in - perhaps I'm heading down the wrong path but there is likely more to this placement than a simple short term cash injection. Also note - another c.10% was collectively picked by existing institutional investors of the company. SB
Tony J made a $100m donation in 2019 to fund a new AI research building in New York for Sinai, and was chairman of the finance committee for Mount Sinai Hospital System. So there’s the link to RENX. Let’s hope he’s a smart investor! Would be interested to see how Randy B views this move. SB
I wouldn’t rely on the buy sell price at the moment Scooby - could have been a delayed trade. There is no price support evident for now from what I can see. A decent set of results should have seen us trading in the 50’s. Instead we are 50% below - meaning we need a 100% increase to get back there. Any directors buying at this level…..SB
Apologies - as ShearC notes it was more like 50% of the ADR's (which in total represented 15m shares). Might be a connection with Sinai - New York. Wonder who they will appoint to the BOD. You have to think this investment has been made with some degree of inside knowledge re current trading and expected milestones. SB
Randy is still optimistic and supportive - he's betting big here from what he says. Jefferson Capital appear to have picked up all the placement ADR's and possibly some of the ordinary shares (I cant see any previous ownership). So private equity business now a major holder behind Sinai and Harwood. SB
It’s contagion unhooked - it appears the actions of Harwood/Mills are impacting on everything health related in their holdings - you may have also noted they took Sourcebio (SBI) private way below a recent placing which cost shareholders heavily. It’s simply bewildering how the wheels have come off all at the same time. On the basis it’s been nothing but bad/poor news - Vrci shareholders are right to expect the worst given the lack of any update. I hold Niox too - another in the stable / although that reported pre Xmas and was actually ok - although they have been through a time in the last two years!! ATB - they can’t all be lemons surely….SB
Hawker - I do get the need to put some perspective on this weeks need - and appreciate it was not all disaster level feedback. However / comments such as “ The Company will recognise large exceptional costs in 2022” for me are akin to a profits warning. In H1 2022 the company made a £1.6m exceptional provision - which merited no ‘large’ narrative. Makes you wonder what’s coming. Further / given the level of cash flowing out the business, and bearing in mind our H1 earnings were already suffering - our full year earnings are likely to be below our dividend payout which raises the possibility that will require to be reviewed. The fallout continues and still many issues to be fully addressed. I hold / but as others have commented this is becoming a familiar tale of Harwood led stock fails. And to now blame COVID given the positive impact at the time - truly bizarre imo. SB
I think they are hedging unhooked - just in case FDA gets delayed and using the recent price increase to raise cash. Will be interesting to see how much Jefferson have invested - they will have driven a hard deal hence the large discount. Let’s see how nasdaq reacts - the blackstone influence should not be underestimated. SB
Jefferson River Capital is one of two family offices financed by Hamilton (Tony) James, vice chairman for the Blackstone Group LP. According to Bloomberg, James's wealth, about $2.5 billion, is spread across at least two family offices, Jefferson River and Swift River Investments. Clearly close links with Blackstone - private equity. Interesting and something we should take note of. SB
Questions, questions….why did our CEO claim this was not required a couple of months ago, has this been done in anticipation of a successful FDA outcome and subsequent price spike (and if so the price discount looks very advantageous), conversely is this to bolster the company’s position based on further cost bursts and lower test sales? The management team are privy to info on Q2 trading and first few weeks of Q3 so are one step ahead of the market. Both Sinai and Mills have reduced their overall % holding after this exercise and we will have a new shareholder director from the new placing entity. Placing is significantly below last years - can’t imagine that will have gone down well. SB
EKF shareholders screwed on Monday, today its RENX turn. And it’s only Wednesday - plenty of time for others in the Harwood stable to get done over this week as well. SB
I think we can see from the share price reaction the TU has been deeply unsettling. There are many questions which have been raised and remain unanswered - the majority financial. Until there is further clarity on exactly what has transpired in H2 there is now a degree of risk attached to ekf that was starting to reduce after its rapid covid expansion and exit. I suspect we will have to wait until the full year results to find out what the real impact of yesterday news will be on revenue, earnings, cash for both 2022 and 2023. The further issues clearly relate to a BOD who appear to have been asleep at the wheel which is equally troubling. £100m in market cap wiped in a few weeks - £25m Harwood/Mills alone. Insider leaks/trading. All very damaging and in the public eye. It will take time to regain confidence - but in the first instance we need a clear and transparent set of audited accounts with an honest narrative to reassure investors there is not further trouble to come. SB
Based on yesterdays diabolical trading update performance from Vrci’s former stablemate ekf, it does make you wonder when/if we will hear from the team here. On the plus side it would be difficult to fare worse than ekf….it was a new low benchmark for poor investor relations and corporate mismanagement. Maybe Vrci is better run….SB
Very disappointing update. Decent core business but we are screwing up both our investment plans and acquisitions. Oh and BTW we have spent all the COVID upside money and in addition have some exceptional costs to close down all the capacity we brought on line to process tests (a simple side line but looks like we have managed to mismanage our foray into that sector) but thought we would wait to drop that nugget until we had lots of bad news to get out. Our CEO is useless and has clearly been running a bottomless investment pit but we will let him hang around as no one else knows what's going on in the US but on the plus side we will bring back our exec chairman who was paid (and others) a £2m bonus 18 months ago for getting the market cap to a decent yet entirely temporary level driven by unsustainable and costly COVID ramp up which has since capitulated as we evidence an inability to run our business. Well done EKF. A total sh_t show. But 2024s looking good eh. Amateur. SB
No problem unhooked. EKF purchased ADL Health from its management/shareholders (vendors) for $10m in October 2021 - the purchase price was paid to the vendors via the issue of 9m shares as the share price at that time was c.80p. ADL Health was a new company and had only been in existence for just over a year having been established to process COVID tests in the US in their certified laboratories - possibly what attracted EKF. The 9m shares were subject to a 2 year lock in period from October 2021. In addition there were some hefty earn out clauses payable over three years but only if that division made $5m EBITDA minimum - which based on our H1 accounts relating to laboratory services is unlikely to be achieved (imo). In a touch of irony after the share price collapsed in spring 2022, the company elected to purchase 9m of its own shares using cash on its balance sheet (buyback) at 40p a share and ultimately cancelling those shares - the logic being that the 9m ADL issued shares only cost 50% of the amount given the company purchased and cancelled the same amount for half the price. Whether any of this has any bearing on what has happened this week I cannot say - I was merely trying to think out loud what could have happened and could be completely off course! SB
C.20% loss of market cap in a week driven by sale of 8.5m shares at 41p (another 3.5m confirmed tonight in addition to yesterdays 5m). So just under 2% of company traded as we await a trading update. Messy. I did wonder if this is ADL holders exiting but they are still under a lock in period - they received just under 9m shares in October 21. Maybe next week will throw up some answers. SB
What we don’t know is has the seller stopped; and if their selling was connected to some activity we are as yet unaware of - possibly linked to the TU. Until these issues are cleared up we will likely remain in a nervous investor market here. I have been an active buyer last few weeks in anticipation of a decent update - timing eh……SB
Revenge is a dish best served and all that!! The move has certainly spooked the market. Just when ekf was moving in the right direction for a change. SB
Goes some way to explaining the bloodbath earlier this week if these are catch up trades. Just over 1% of the business sold at 41p a share - if it’s one of our declared 3%+ holders we should find out who was selling - if not we might never know. Still a strange coincidence with a later than expected trading update - we will find out soon enough if there is a connection. SB