Member Info for TommyFlowers

C7, can we take it from your emails with CH that the debate about needing more cash sooner rather than later is settled ? The debate is now just about the form that cash will take ?

I think the one area on which there seems to be agreement by most with respect to SCLP is that it’s communication with Shareholders is really not up to the mark. We now just sit and wait for FDA approval to start trials. If that comes soon I suspect we will see a good bounce in the shares and I suspect that bounce is used for a sub 10p capital raise. Not ideal for the longer term holders but given where we are today it would probably be the right decision. Positive SCIB1 trials results are the key to unlocking the potential in the science. I think things have become a bit binary for existing shareholders good SCIB1 results we can raise no dilutive capital to unlock the rest of the science. Negative or inconclusive results and unless we are all prepared to pony up other investors will be taking the upside of any realised potential in the IP. I am pretty happy to take that risk on as I am optimistic that the data will be good. So all of that said the FDA approval in the next few months becomes quite critical.Fingers crossed.

Sorry, I may have misunderstood what you were saying. I thought you were saying we were ok for cash. If we need to raise cash then I agree the last thing you want is a falling share price .... death rattle and all that. If we are ok for cash until a SCIB 1 read out then I am not sure it is possible to wreck an investment, it is just a temporary mark issue.

two ways to look at it .... yours is probably right ... however the other way to look at it is if they were both so important and valuable why did there previous employers let them go ? They have more than enough resources to match anything SCLP can offer.

Inan, just curious if we are ok for cash and as investors we have a long term view. How do a few people posting legitimate concerns about cash flow wreck our investment ? By your logic it is a closed loop (no need to use the share price as a mark to raise cash) and should only have a transitory mark to market impact on investments.

Point well made .... radio silence for a while.

Ruck,

I tend to agree. Well we know that 1 trial is funded but we just have no visibility on time frame. Like you I suspect the SCIB1 trial is not fully covered. Assuming they have a near term start date, if it were me, I would announce it and at the same time do an underwritten rights issue for 3 or 4 million, pull the plaster off in one go. Then the results can speak for themselves. Or better yet they do have something lined up, in which case I owe management an apology. On a positive note the BB may become more balanced for a while. Clouds and silver linings and all that.

Lauds made me laugh as well.... not really reading the crowd well with that headline .

Maybe they are after the cheap options they will be getting !

C7, Maybe you are right .... the buffer is still very tight. The old motto is raise money when you can, not when you have to ..... if they don't get in front of this soon I fear they will be moving from can to have to .... those terms will look very different.

No indeed ...... Also dont need to sell a lot of kits to have a very meaningful effect on company profitability. Even if a market is only good for 175 patients a year you are looking at at least GBP 150k to operating profit.

I have to say I think the deterioration in the cash position was bigger than I was expecting. They better have something lined up as the additional hires will only increase the burn. The BOD has allowed us to get in to a very precarious position. We could end up with no trials and no cash .... then the IP is at the mercy of whoever comes along and allows us to keep the lights on. If management do not get in front of this and I think they have @ 2 months, you could hear the death rattle .... lower shareprice, smaller capital raise, more dillution... Sadly we only have one of the things that we need to succeed and that is the science, management is clearly not up to the task of managing the company and I am pretty certain they are not up to striking a "good" commercial deal. It really is a shame such potential. I reckon there is 2 to 3 months to save the company for existing shareholders ... We need a near term and clear date for the start of trials ....I have my fingers crossed.

The cash at bank at 31 October 2018 was £7,576,855 ........ That will have dropped another £1 to 1.5 million at through to today. With the cash burn and trials to pay for it is looking very very tight to get to the other side of the trials (assuming they start soon) without needing to find some cash. I think we will see a rights issue or similar before the middle of the summer unless BOD have a rabbit to pull out of the hat.

ChondroMimetic® Update
Distribution Agreement with Indonesian Partner and Update on CE Mark Process

Nice to sign up another distributor, probably not huge but nice none the less. Do I detect a bit of back pedaling on the CE Mark approval time line ? If that is the case it is not the end of the world but would still be a bit disappointing.

IXICO was tipped today.

https://www.thisismoney.co.uk/money/investing/article-6640533/SMALL-CAP-SHARE-IDEAS-Biotech-IXICO-spotlight-fight-against-dementia-step-gear.html

Given there is no real guidance and that research is not making forward projections I thought it would be fun to have a bash, in the simplest way possible, at making some projections about profitability going forward. Please add input.

1. We have been told on a run-rate bases we will be EBITA positive by the end of this year. Using the first half accounts and doubling them gives us a revenue of 4.1 million and a LIBTA of - 1.32 million. So logically to eliminate a LIBTA hole of 1.32 million we would need to add revenue of @ 1.88 million at 70% margin. So that gives us year end revenue of 5.98 million as our EBITDA breakeven and the base for our 20/21/22 revenue projections. So if we exclude Chondromimetic as a separate item and grow our revenues at 15% per year and keep gross margins at 70%. Our FY 20 revenue becomes 6.87 million (EBITDA of 890k), FY 21 revenue of 7.9 million (EBITDA of 1.92 million), FY22 revenue of 9.08 million (EBITDA 3.1 million). So I have not inflated the SG&A since the base year I will correct for that by only taking in 85% or the EBITDA figure in to the final calculation.

2) Chondromimetic - I reckon GOP for this product is going to be @ 650 and I am using 1.5 sales per treated patient. I am going to be very conservative here with respect to uptake 800 patients FY20 (1,200 unit sales), 1,600 patients FY 21 (2,400 unit sales), 3,200 patients FY22 (4,800 unit sales). So that would equate to an additional contribution to EBITDA of FY20 -780k, FY21- 1.56 million, FY 22 - 3.12 million. Again will only take 85% of these figures to allow for higher SG&A costs.

That gives us

FY2020 EBITDA of -1.4 million - based on todays 13 million market cap = 9.2 x EBITDA
FY2021 EBITDA of - 2.9 million - based on todays 13 million market cap = 4.5 x EBITDA
FY2022 EBITDA of - 5.2 million - based on todays 13 million market cap = 2.5 x EBITDA

I have not factored in a capital raise, one may well be likely but I think there is a chance they can get away with out one. I also accept the Chondromimetic is a wild card and the sales, certainly in years 2 and 3 could be off in either direction by multiples of my numbers. If these number are even in the ball park the stock looks very cheap to me.

Tino, if you have missed it then so have I !!!

If the timetable, management have previously indicated holds then it cannot be long until CE mark. They have always said approval and first in man by end of 2018/2019 financial year. Only 2 months to go.

Chelsea, where does your confidence come from that additional capital required will be non dilutive ? I hope you are right however the history of small cap pharma would suggests the odds are against you. Everyone says they will use non dilutive finance until they have to. A bit like the Mike Tyson line that everyone has a plan until they are punched in the face. Fingers crossed our plan works or else we will have to reach in to our pockets one more time.

While I am at it I found the article posted yesterday by the former Chairman very interesting, in particular the bit about the potential spin out of some of the IP and why he rejected it, I agree entirely with him.

Right, distraction out of the way! Lets get down to business, there are 2 clinical trials that need to be progressed and that should be the only focus of the company for the foreseeable future.

They have said they have signed up some distributors in Europe but not named any as of yet...

Seems Sandozmedica maybe one in Switzerland.... see the link below if you let the slider photo at the top run through its loop they are showing chondomimetic.

www.sandozmedica.com

TF, I want to be clear I am not downplaying the chances of winning the Grand Challenge, I suspect we will win. I just think putting more products in the pipeline when we have a very real and immediate opportunity set in front of us is distracting. I put it to myself this way, what would I chose if I was faced two options. A further 12month delay in clinical trials and winning the GC or not winning the GC and have the trials start next month ? For me hands down it is the trials.

We are a 30 million market cap company, unless we progress the fantastic and abundant science we have we will be looking at a more dilutive capital raising. Advance some of that science to a point where it is sufficiently derisked and we will have our choice of non dilutive finance.