The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Thanks for sharing that vig - perhaps max and his team will get closer to this issue when their share options kick in big time next year - although I suspect any awards based on share price performances will be difficult to achieve irrespective of wider industry contagion so it’s the 8p earnings which will matter most. Also agree on the pain for PIs - but in reality all investors are taking a beating here despite a growing business with a 20% ebitda - and it’s those major investors who need to put pressure on the board to align interests - or they will vote with their sell buttons. SB
Should hear from the team next week - NAV, dividend and full year report due. Will be interesting to see where GCP goes next following GABI and RM knock backs. All key valuation metrics now complete nonsense. Current market value £550m v net assets of £1B and third party valuation of £1.1B - and those valuations are relatively conservative based on what the company achieved on recent asset sales. Gravis appear overly punished as investment managers continue to reduce holdings and by doing so inflict losses on their investors. That said - there’s a lot of bad stuff happening in the world and some pain here needs to be taken in context. SB
Makes you wonder how the market would react to a poor update…..although looks like polar are reducing holdings which just continues downward pressure on the price. At least an acknowledgement that debt needs addressing was included - I would hope full year results in March 24 sets out a path to address shareholder returns. SB
Update is a little bit later than last year. I hope it’s not because there is some other news on further acquisitions - the business needs to focus on shareholder returns imo in an effort to create some meaningful interest in its valuation which is abysmal - accepting AIM is a full scale horror show. SB
Andypa - I think the reference to 'meaningful' reductions in quarterly burn rate aligns with your comment on cost cutting - although it probably got a bit lost in their results narrative. In relation to partnerships - whilst these are a good idea - renx will want to remain agnostic in an ideal world - although we are far from an ideal world at present. One of the issues which has been on my mind for a while is whether or not the core shareholders continue to support the business by way of fund raising. Each have put a considerable sum into renx - and all are way under water on their investments. Now that renx is moving into a commercial phase business - and certainly we have seen how this impacts on Sinai with the ending of the $6m testing contract, their willingness to invest further may have altered. The recent move to remove pre-emption rights for each major shareholder when issuing new shares (preferential rights for new share issue) was followed up with both Sinai and Jefferson drafting prospectuses invoking their 'piggyback' rights under the registration rights agreements signed in 2022 and 2023 in relation to the ordinary shares and ADS shares purchased by them at the time. This essentially means they are potentially offering for sale all 31.5m shares at the same time as renx undertakes its own fund raising - with those sums flowing back to Sinai and Jefferson. There is clearly a lot of work going on in the background preparing renx for its next move - and there is no certainty what I have highlighted above will progress - but the paperwork has been lodged in advance of what could be a major move and could have any number of outcomes. SB
Since floating on AIM in 2018 with a market cap of £65m Renx has raised c.£145m in 5 rounds of fund raising (including issuing a total of 55m new ordinary shares or ADS equivalents, a convertible bond to be repaid in 2027 and a private placement). Shares have been placed at various prices with a high of £5.37 in 2020 to a low of 90p earlier this year. As we know Sinai, Harwood and Polar have remained consistent holders with Jefferson joining as a major shareholder in 2023. Why is this important - well I just reviewed the S-3 Shelf Registration document with all supporting documentation including a draft sales prospectus which makes provision for the issue of new ordinary shares, debt and warrants up to a value of $200m in tranches (including reference to the shareholder consent received at the AGM to proceed with this). Sinai and Jefferson have specific rights in the S-3 with regards to protecting their current position (including requesting underwritten offers, pre-emption, piggyback type stuff). At the same time Renx in its full year results advised it was meaningfully reducing its quarterly cash burn rate for the remainder of 2024 (and presumably thereafter). This would appear to confirm Renx's core shareholders are preparing for a major fund raise and as part of this have 'instructed' the business to slimdown all non essential expenditure to increase the attraction of the company to non core shareholders. Probably explains the recent share price movements......SB
No problem unhooked - and these provisions were made specifically after the last $20m placement so it’s all available to be called upon. SB
Unhooked - the primary restriction on the company relates to the amount of shares it can issue as part of any fund raise. It can issue 33% of its existing share capital in new ordinary shares (c.30m shares); and a further 20% in the form of treasury shares which would not be included in the current share capital from what I can make out. The latter is quite interesting as it would potentially allow a new investor to immediately secure a large % of the company without having to accumulate ordinary shares in the open market. These options tie in with the statements made in the full year results where James M confirmed S-3 shelf registration statements were being filed which would allow new shares to be issued at some point in the future. I agree with Hawker - a fund raise is not 100% certain - but other forms of finance (bonds in particular) are equally expensive in other ways. My only hope is that non core shareholders (ie those outside Sinai, Harwwod and Jefferson) are being considered in the current requirements - to possibly reduce the possibility of the company being taken private. What is always the case - we PI's will be the last to know. SB
I’m thinking a dilutive fundraise - which will only be able to raise a limited amount of cash due to the restrictions in place - would be a decent result here. Market starting to price the company being taken private imo - with all its patents of course….SB
This is getting very ugly, very quickly. Looks like Armistice called it correctly back in June - it’s difficult to watch and wait and see what the company’s next move is - and in the meantime see large chunks of remaining value lost each day. The big question must be getting raised - is there a future here for Renx as an ongoing independent business without any market traction despite spending significant sums to reach this point. SB
JonnyGee - I bought into the buy to build story which Max and the team have been executing well up to the point where debt became a very expensive commodity on your balance sheet. imo a business should adapt to its market environment - and when it does not there is a risk is becomes a less attractive investment which I think we have witnessed here for some time. There is no debate on the loss of shareholder value - it is significant. As for sales - overall group volume is down 3%, and EBITDA margin is also down first half of 2023. Perhaps it is all about a future exit strategy - as and when the management team secure their share options. But debt and lack of shareholder return are a huge cloud over the business with neither being addressed by management. We will agree to disagree on the issue of multiples and how it impacts on valuations - but appreciate your background is PE. One query if I may - you highlight that the company is trading at a multiple of 5.5x 2023 EBITDA. From my calculations 2023 EBITDA should be in the region £110m/115m. The current market value of the business is c.£360m. This would seem to imply an EBITDA of 3.3? A multiple of 5.5 would give a market value of c.£600m or 87p per share which I am sure would be more acceptable to current shareholders? Apologies if my arithmetic is incorrect. SB
Could be a number of things - might be waiting to cancel en masse once current buyback is complete; they might actually hold them back and sell when (if....) share price recovers; or they might not actually be focusing on this given the buybacks total about £10m and this sum is being lost in market cap every day for some time now - £400m below 'book' value. The entire infra sector, much like the stock market in general, is a busted flush at the moment. Latest hit is HS2 - not that anyone is actually investing in that basket case as its a capitally funded project but why let reason get in the way of investment manager strategy. SB
Buyback seems to be having the opposite effect from its intention......now trading at a full 40% discount to NAV. There must be some very awkward conversations with II's taking place - all market confidence in the Investment Adviser seems to have evaporated. Looks like another 500K buyback today but that seems to be accelerating the decline. £240m of its £1b loan portfolio due to be repaid in the next three years will allow £100m RCF to be paid in full with surplus cash available for buybacks, capital returns, special dividends - but negative focus on electricity future price drops seem to be creating a rush to the door. Sit tight....? SB
I think your comment is 100% spot on unhooked - we are all 'gambling' in an area where quite frankly it is becoming clear it is not wise to do so (accepting those who got in early probably made a load of cash in 2019/20). I sold a chunk this morning - I am close to bailing out completely but like you I am still gambling - its as simple as that. I am listening to the webcast as I write this - and am not hearing anything which I did not expect to hear. No guidance as usual - although this is pretty standard now. The only snippet relates to what the company expects to achieve by securing 1% of the 14 million US kidney/diabetes market over the next three years. So - 140,000 tests - c.$130m revenue with a clear ramp up from its current dismal efforts. And yet still underwhelming, but clearly a step in the right direction. The time to raise capital was post FDA when the share price was high, momentum was good and dilution would have been minimised. Now its going to hurt big time - Jefferson River, Polar and others will be fizzing in the background - and if anyone is to suffer here it will be PI's hit the hardest imo. The market has reacted accordingly. An entirely predictable outcome. SB
Messy. Again. Big issues are starting to emerge on the sales front. As usual the RNS attempts to use data to focus on strong growth in volume ie up 55% on prior year, 5500 tests in the year, 1200 per quarter.....however Q4 revenue was less than Q3, which itself was significantly less than Q1 and Q2 due to the ending of the $6m Mount Sinai testing contract. Q4 2023 revenue was $0.5m - so Renx appears to have been paid for about 500 of the 1200 tests it processed. Even worse - 100 tests were classed as bad debts (or suffering 'collectability' issues as the company puts it). Q1 2024 appears similar - only 50% of tests are revenue generating - so c.$600K secured on 1200 tests. Nearly 12 months into the VA contract and no sign of a single test sale. Tens of millions of insured lives - none of whom are benefiting from the available test technology. A substantial direct and indirect sales force - and collectively bringing in c.$175k a month for a business spending c.$3m. Yes its still 'early days' - but there is simply no evidence there is a market for KidneyIntelX. Looks like the quarterly cash burn is down to c.$8m - so there is about $17m of cash left in business as of today - enough for two more quarters. S-3 forms being processed to allow capital raise - although reference to potential non-dilutive funds possibly linked to some form of partnership. Could be another tricky meeting for James M this afternoon. SB
I've been wondering the same myself spindok....economic conditions and interest rates are clearly part of the problem but at nearly a 40% discount to NAV this does appear to be either completely oversold or there is a loss of confidence in those running the fund. Lots of trades today - some relatively big - lets see how many were buybacks. I'm personally buying at these levels - heck of a yield - and even with some bad arithmetic on the management side there must be scope for a decent upside next year imo. Major investors must be in touch with mgt - capital markets day in October with latest NAV announcement. SB
Like the vast majority of financial results from Renx I am struggling to see any good news coming our way on Thursday. I’m probably not the only one questioning whether to sell tomorrow rather than risk another car crash reaction to a lack of progress in selling tests. The only light might be an update on how Q1 2024 is faring post FDA. Possible there might be a dual release on new funding? SB
Welcome Mr M - to the dichotomy which is Renalytix. A business with an AI driven simple blood test capable of early diagnosis for a global disease including vast numbers of Americans who additionally benefit from an agreed national reimbursement rate from the CMS and a host of partner organisations in the public and private payer markets providing access to significant patients populations. Yet - despite this - the company has struggled to sell its product outwith an agreed testing contract with one of its founding members and is now likely (imo) to only have enough cash in the bank to last another three months. It is a member of the 95% club - losing 95% of its market value in the last 2 years. I could go on - but you get the picture here - it is high risk. The upside could be significant if it can demonstrate a sustainable business model which allows funds to be raised in a way which does not wipe out shareholder interest - alternatively the downside is a business which gets bought for its IP. Its not been an easy ride and its getting to the point where the market is spooked by the lack of any tangible communication on what is going on behind the scenes. As I say, welcome......SB
The trading on Nasdaq appears to be fully coordinated using small trades of 100 shares throughout the day to take 5-10% of the market value - these trades do not appear to be private investors so my assumption is someone is shorting and doing pretty well. This then flips into loss of confidence on AIM in the UK and so the pattern continues. SB
Sorry Darton i should have said where I saw your purchase - X!. I reckon it would need to be 40/45p+ for any serious talks here - and even then I'm not sure Mills would go for that. As for SRC - I'm there as well - lots of potential but they need to look at bringing debt down and a dividend as opposed to ongoing acquisition trail imo. SB