Member Info for Tillerman

It sounds like Destiny speak for when the CEO came out the AGM and saw the effect his wise words and the statement had had on the SP, he wished he had actually said this and the next best thing was to slip it into the note.

If they had omitted the words "existing cash runway" from the RNS I suspect most of the drop could have been avoided. The only thing the company appears to be truly "laser focused" on at the moment is the destruction of shareholder value.

A lengthy and well publicised strategic review does play to the BOD's sense of self importance however, but it is something other companies manage continuously without any fanfare.

The potential cost of OBI's 5,000 patient trial is rather large, hard to see how they could fund it themselves realistically. They will need to make some kind of nominal start to it in q3, as they have indicated, to enable them to keep fund raising. Their last results were not encouraging it is fair to say, considering they have been pushing the tech for some years.

Ondine playing a poor hand well, Tovey/Rudd playing a mixed but potentially exciting hand badly. Ondine now valued higher than Dest despite needing to raise more cash sooner, plus having significantly higher cashburn and a much larger trial to fund, and last but not least no 500m partner tie up a la M3.

The melodrama of this over publicised drawn out strategic review by contrast, is doing Dest no favours.

Without more time to pursue licensing opportunities, if available, of the reduced cost trial they don't even know what target they are aiming at.

ODI raised cash with little fuss recently at above par, enough to fund Dest for a year almost, that is all they need while they cut costs and get M3 back on track, italso gives the leeway to explore licensing. They did this by being relentlessly upbeat with the funding of their 5000 patient trial simply left an open question.

The first question in the Q&A session relates to the possibility of the questioner being unpleasantly suprised by a large dilutive fundraising, the subsequent reaction of CT does nothing to dispel the idea that this is on the cards imo. So yes, best hope he has bulletproof shoes.

I don't undertand your last sentence. Imo they need to cut their high cost base which I imagine is a legacy of the previous managment.

It is possible they could eventually find a hybrid solution, say a partner to pay 10million, raise 10m themselves and sell the rights to m3 to sebela for 10M + a small royalty for example, but they won't be doing even partial partnering anytime soon.

We already know why xf-73 nasal is a good product technically, that, by itself, will not save it.

My takeaway opinions from the AGM

https://www.youtube.com/watch?v=_jWIvHd6Gvw

No mention of M3 beyond "we have this product."????

Virtually certain dilutive fundraising coming imo, even if also (less likely) a non-dilutive component.

There does not seem much, if any, interest in their revised 60% cheaper value proposition from potential partners they have approached "to fund or part fund Xf-73 trials", though early days. I don't see them finding a pharma partner based on the presentation, though you can't entirely rule out a partial funding one in return for higher royalties.

Ondine pretty much dismissed as a company giving away a disinfectant solution FWIW.

If they want to fund xf-73 nasal they will have to do most or all of it. Of course this could boost their royalties to up to circa 30%, potentially 100m++ p.a. if they could pull it off, tantalising but not something they are likely to achieve on current evidence. Perhaps they should consider shelving-xf-73 for now and cutting costs which seem rather high considering no sig trials running, grants and so few employees? Then progressing the rest of their pipeline eg diabetic ulcers.

So the balance of the reformulation work and the equivalence testing could have been done in parallel with Phase 3 ideally entailing no delay. Doing it all at once is good professional big pharma practice but not imo, appropriate for startup like Destiny where timelines are critical..

Most reformualtions are done post phase 3 with a simple equivalence test accepted by the FDA, necessitating no further trials. Tovey, because they had to do work on the product re consistency/quality seems to have decided to go the whole nine yards prior to phase 3 instead of just doing the minimum required at that point allowing p3 to proceed.

The reason they want to get this concluded in the next few weeks is very likely that late July/August is not a good time to fund raise with investment managers etc on holidays. There will be no non dilutive sources of funding open to them, especially after today's move, other than the selling off of assetts for a pittance. Even so today's RNS looks like another major unforced error, no co it it's right mind as others have noted, telegraphs a fund raising like that at the best of times, and this is very far from the best of times.

The company has a history of tin eared RNS issuing under the new CEO. The issues with XF-73 are inherited but the mistake of reformulating M3 before phase 3 to the extent a new phase 2 is required is an unforced error of his own making imo, it is this that has done the most damage.

If the Directors want to address the concerns caused by the latest RNS they could perhaps buy a few shares.

The last thing we heard here, just a few weeks ago, was that talks about xf-73 nasal were effectively suspended until the new FDA approval (60% cheaper phase 3) was (hopefully) obtained, now it seems talks are in fact still ongoing but feedback does not seem positive ie. even with new improved trial design there is no one likely to sign up as a partner???

Thsat would seem a reasonable interpretation of the RNS, though feedback from the AGM may supply more nuance.

The results are awful, good luck with this one.

Also worth considering what will happen to the SP here IF the FDA don't accept outright DEST's very ambitious revised phase 3 plan for xf-73 (which is basically, if not actually in, then at least hovering around the door of the last chance saloon after 2 years of fruitless negotiations.) and ask for modifications to the plan and a resubmission.

A 50% drop from current levels and a very long diluted road back?

If you are new to Dest it is worth checking out AIM listed Ondine who have a competing product to Xf-73. also supposedly poised to enter phase 3, their product is probably better suited to the hospital enviroment where both will be used, not least because it only requires a single administration which is directly controlled by a clinician thus ensuring 100% compliance, whereas Xf-73 needs to be applied 5 times (on the same day).

Both co's are strapped for cash and neither is likely to escape further fund raising. When Dest are in a position to do a deal post a new phase 3 plan being accepted by the FDA, they will only have 3 months or so cash left which gives a lot of leverage to a potential partner, deals in the biotech sector are rarely negotiated on such fine timelines for this reason. So a prior fundraising is very likely imo to strengthen their negotiating position.

Al that said Dest still looks fair value at this price.

The XF-73 Nasal trial is mirroring competitor Ondine, first Ondine said they were going to trial 10,000 patients, then they had to cut that to 4,400, now it seems to be have a moved up again a bit to 5,000. At any rate long term prospects here look OK, but a fund raising in a few months is inevitable imo, without that their negotiating position wil be too weak, also likely to be something of a news drought for a few months, with most of the action in H2.

Certainly someone needs to fund their mooted very large phase 3 trial in the US, that what was presumably what the now departed JP Errico was brought in to try and arrange. A trial of that size (4,400 patients) would normally cost the best part of 200 million dollars and is many times the size of a typical Phase 3. It is not clear how much having HCA as partner will help with this. Meantime they seem to be raisng funds on a quarterly basis.

Yes, it costs 20-25million PER TYPICAL PHASE 3 trial - but cost is PER PATIENT. Usually, as in M3 only one is needed. Xf-73 nasal needs multiple phase 3 trials because the FDA will not allow its general use based on single procedure trail such as hip replacement. That is why OND have applied for a 4,400 patient trial effectively rolling them all into one, they are not recruiting that many patiens for fun, but because it essential to unlock the US market. If it only required one 25million Phase 3 trial to unleash a 2 billion mkt in the US, big pharma woule be biting DEST's hand off.