Member Info for TrekMadone

Anyone who doesn’t understand the capitalisation of this company and it’s need for cash as I posted yesterday but incidental may have changed today should stay well away!

If you check back over my posting history here you will see that I have consistently said this is a ‘moonshot’ only for money that you can afford to loose.

However, with an extra revenue stream the balance sheet should now look much more respectable. But we don’t have the details.

The cudos of getting in to bed with GE will also go down well when we look for a phase 2 partner. It shows we have stood up to a level of DD.

But there are many risks here and probably least of all is funding the phase 2. Any investor here should be able to work them out for themselves.

Those of us that have have positioned ourselves for the chance of that transformational moonshot. Not many make it but here there is a better shot than any others within London listed Biotechs that I have found. By moonshot I mean more than 10x return!

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Trek

Me too I am pretty confident Cascadura will come in but the lack of news at Royston seems to hint at going from trucks to buckets of oil!

Still Casca will hugely transform the balance sheet and finance their campaign. It’s all about getting that cashflow in. Then they can focus on the low hanging fruit with extra production wells and high impact drills.

A frustrating investment but I expect it to turn significantly soon!

All easier to say though if you are in at 40p as opposed to 90p!

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Trek

Hopefully for the sake of PI’s they are getting wise to the shenanigans of these CEO’s pumping a stock before a placing. It’s more about protecting the director’s interests should the drill go belly up. That way they still get another year’s gravy.

Smart trade Blue. Now you have options to average in and back out again as you see fit.

IQAI…. Tipped yesterday at 3p….nice news there and completely not understood by the market.

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Trek

It’s great to have this news follow on from the results.

I posted that they needed 134k to stand still assuming the other inputs remained the same.

So we either see a conversion next week or as is now more likely we just carry on with the premise that the GE deal would likely have involved a down payment. Even 500k wouldn’t be disproportionate but it would be hugely significant for us….

“ This agreement with GEHC is a major development for IQAI,"

Then going forward we should expect income from licensing and regular system upgrades.

Well in the absence of financial terms that’s my guess. We will only know when we see the cash balance and revenues in the next results as it’s normal for these deals to not reveal terms.

Well we aren’t that desperate if we have given £12k to charity! The tone and timing of the follow on RNS indicates to me an amount of exclusivity with GE so we are going that way whilst still pals with Mayo.

——

PS, Xv, you asked about costs of trial and how it’s being paid for. The phase 1 is predominantly grant funded by NIH, Charities and our LA hospital revenues.

We don’t have a ‘this will cost £x situation’.

It’s in the costs of operations (297k) which is ongoing and the grants are normally included as total non-current assets (669k) as opposed to a separate line in the accounts. However, the footnotes don’t say that this is or is not the case but by deduction it’s probably in there.

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Trek

Higher interest pays the pension of employees easier but has a detrimental impact on underlying debt instruments f the providers.

This may help capture the idea…

https://www.pensionsage.com/pa/Rising-interest-rates-prompt-employer-solvency-concerns.php

For PHNX it theoretical should mean more books come on the market as the seller can show they are financed whereas before when rates were low many were in jeopardy of failing their DB customers.

So having had a previous scare it would be logical to offload the risk to the likes of PHNX during a high rate period.

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Trek

Lots of trades around same time today, 09:10:15…

They may have finished the interims and given Stifel the nod.

Just a guess, could be MM shenanigans!

Usual caveats

Trek

Looking at the lows….

505.8 20th March 2020…covid……………781

506.8 20th Oct 2022… LDI…………………647

545.8 4th April. 23…US banking crisis…….591

522 6th July 2023…. Inflation peaks/rates rise……560

506.8 today 18 Aug 2023…inflation woes/rates to go higher…..???

Then the recoveries…which has resulted in a significant rebound albeit each low has resulted in a subsequent lower high. But recover it has.

Anyway I have picked up more on the basis that even another rate rise cant possibly be as bad a news as the previous news we have gone on to recover from.

PHNX actually benefits from higher yields but they loose assets through right downs but they are hedged.

So it’s a case of which impacts offset the other. LGEN still increased their divi from a similar narrative.

Whilst I don’t expect a divi increase PHNX has 1.6x cover (last I looked) and recently increased it.

PHNX has fallen more than LGEN/AV and MNG amongst others. It potentially has the best opportunity to rebound from these levels.

Markets could actually recover on the run into Christmas if the BoE and Fed indicate rates have peaked. The job markets are tightening.

Pays your money takes your choice. Being a bit contrarian and wrong so far! I think 506.8p was the double bottom. I just didn’t expect it to hit it on the nose again!

But I am sure well placed to trade some on the way back up!

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Trek

Evergrande (there’s an oxymoron if ever!) applies for chapter 15 bankruptcy in US…

4hrs ago…

https://www.bbc.co.uk/news/business-66540785

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Trek

Upomega,

Is Briggs FoS like many other CEO’s, just another on an ego trip when things are going well taking his millions and spinning lies. Or does he really understand the business. It’s mitigations when putting out half year comments about how hedging makes PHNX inflation agnostic?

Aug 22 RNS. Interims…last but one set of results…..

“

· Strong balance sheet with a Solvency II Surplus of £4.7bn2 at 30 June 2022 after a £450m debt repayment (FY 2021: £5.3bn) and a Solvency II Shareholder Capital Coverage Ratio2,3 ('SCCR') of 186% (FY 2021: 180%3).

· Our hedging and credit risk management approach limited the Solvency II surplus economic impact to just £(0.2)bn.

· Fitch leverage ratio4 reduced to 27% at 30 June 2022 reflecting active deleveraging (FY 2021: 28%).

· Phoenix manages a high-quality c.£34bn shareholder credit portfolio, which is 98% investment grade and with only 19% in BBB; our exposure to cyclical sectors is low at only c.3% and high quality with an average credit rating of A-.

· Phoenix has no material exposure to inflation, with our key product and cost exposures hedged.”

And you will see bullish reiterations in the finals..

13th Mar 23…

“ Growing our dependable cash generation

· £1,504m of cash generation1 in 2022 (FY21: £1,717m), which exceeds our £1.3bn-to-£1.4bn target range for the year.

· £12.1bn of Group in-force long-term free cash has increased by c.£0.3bn (FY21: £11.8bn) as our business grew year-on-year. This cash, which will be released over time, ensures our growing dividend is sustainable over the very long term.”

Note ‘very long term’. That’s more than a year FFS!

You can also read the rest of the confident guidance in that RNS which again pitches results at top end.

So what does one surmise?

A) PHNX has been dragged down following LGEN results, a different book, same sector. But then Aviva’s were pretty bullish. Both stuck to their divi guns.

We net out as a drop in sp due to sector decline even though we are different!. Sells have edged buys pretty much the last two weeks but not by much. But then the market moves on trades. There is no reward for a position of hold. The LSE and MM’s don’t make a living off of hold! So there will always be a disproportionate move either north or south even on low vols. That’s how London gets paid!

B) the market has it mostly wrong (that’s where I am ) but it needs to see the results that have been telegraphed!

That breeds nervousness now (also where I am) as it’s new reporting can mean the IFRS ‘opportunity loss’ could have a distortionate impact to the downside! That was posted earlier by Grayling, but IFRS has been known about for years! So it’s shouldn’t have had a detrimental impact on previous guidance!

I bought at 545, 5222, 518 and 512 recently all now red. But I got my average well down and convinced this will bounce. If not take divi, sit it out!

Ops and finance wise this is actually an unbelievable story!

So to the balance sheet….

Numbers are end of June..

Cash 90k

Income 282k

Profit 278k

Costs 578k (Admin 572k, Finance 5k etc)

Loss 300k

Cash used in operations is 224k.

So for 6 months left assuming grants and revenues stay same (they should increase) only 224-90k = 134k needed to stand still running the same operations.

If we manage to get a partner then using destiny pharma as a paradigm (I don’t hold) they should finance the phase 2 fully and pay IQAI milestone payments. E.g reaching max pts, achieving FDA accreditations at each stage or whatever.

Then if we are mixing GaM with other FDA approved products that will be another financial thread for IQAI.

Then there is the 45 hospitals interested in IB that we have TeraRecon and Bayer committing their sales teams to.

We have the LA hospital revs and hopefully grow the 282k.

Let’s be realistic we will need cash. In the going concern it’s not an issue. We don’t need to go to market. It will be a CLN top up (prob why share price is low!) at say 3p a share. With a bit of headroom I reckon 160k of CLN’s say 174k to include costs. That’s to see us through the second half.

= 5.8m shares

182.62m in issue = 3.18% dilution.

But here’s a thing. The last placing was for 620k at 5p on 7th Oct 2021!

That’s nearly two years ago!

This time I think a smaller placing to get through this critical stage where we develop sales and JV partners and then another placing if needed later.

But TB could as easily double that amount to just 6.4% dilution for 348k should he wish to avoid coming to market so soon. He is at 17.64% having established ‘free association books’. They hold 11.26% so he has 12.36% headroom under takeover code unless he moves more stock to the family ‘fund’.

This could actually be a rare situation where we see 5% dilution say and the SP goes up more than 10% as the spectre of finance is put to bed for a good while thereafter!

Anyways I have focused on the finance side as the ops are axiomatic and the news there should be forthcoming in its own time.

This is now looking a much less risky moonshot at a huge upside after a few years . That’s if we are not snapped up or sold beforehand.

There is an embryonic chance that IB revs and a JV could fund all of the phase 2 & 3 studies for an orphan drug with significant unmet clinical need! Wow!

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Trek

Thanks. So it was! Need to update my tracker! Lol!

SP has held up very well all things considered.

Still I have the downside covered now by waiting to add a few back in - only way is up!

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Trek

With a 100p average I just thought I had to look after some profit.

IQAI… should rerate massively now. Let’s see!

Usual caveats.

Trek

I will read in depth later as off out but a 300k loss peanuts! After all they have achieved the finances have stood still that is absolutely outstanding! Remarkable!

It means TB has plenty of headroom just for a few CLN’s if needed. We have had the opposite to dilution as grants and revenues have got us through near two years now!

Now with finances you have earnt the right to read everything else!

And now he’s talking about phase 2 with a 5m mcap!

If this does rerate now I will be amazed!

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Trek

Obviously that’s what we were waiting for. Clear the decks for societal investment !

It’ll come.

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Trek

“ Vladimir Putin is to meet with key finance officials as the Kremlin considers forcing companies to buy roubles with foreign earnings to prop up Russia’s falling currency.

The Russian president will discuss proposals with the country’s finance ministry as it finalises the plans, which are expected require businesses bringing in Western cash to sell it in exchange for the rouble.

The measures to dispose of “unfriendly” Western money, first reported by Reuters, come after the Central Bank of Russia increased interest rates by a staggering 3.5 percentage points in an attempt to halt its currency’s slide. Russia implemented similar currency controls shortly after the invasion of Ukraine last year.

The rouble briefly fell below 100 to the dollar this week and has tumbled by around 25pc in 2023 as oil export revenues fall and Moscow spends heavily on military equipment to fund its faltering war effort in Ukraine.

The proposals would compel Russia’s exporters to sell up to 80pc of their foreign cash reserves within 90 days of payment and ban companies that fail to do so from receiving any government subsidies. The Financial Times first reported details of today’s meeting.”

Can you imagine the impact on the balance sheet in fx losses! That will feed back into reduced tax revenues.

No choice though else it’s back to play school. The square, arch or round window! Remember that!

https://www.telegraph.co.uk/business/2023/08/16/uk-inflation-house-prices-interest-rate-ftse-100-latest/

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Trek

I sold a few. Whilst it’ll be contract and insurance with all the previous mud slinging that’s gone on there may be a pop at SEPL as operator. I figured it may be holding up with xd tomorrow so took some off to protect profits with a view to picking them back up later when things settle.

RB really hasn’t had much luck!

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Trek

Still very bullish on the future and explains how hedging is there to ensure business is viable.

Not sure folk get that you just wouldn’t hedge prices below your breakeven and even during the low price cycle we have a +50% cash margins.

1Q23 achieved 54% cash margins with $150m EBITDA with an average HH spot of $3.24

This quarter will be interesting as unit costs will undoubtedly go up as it’s inflationary.

Cash margins around the same 50% (annualised 35% FCF yield) will be a great achievement.

With Tanos 2 numbers our cash theoretically should increase if it is indeed accretive to EBITDA.

But all the market probably wants to see is debt repayments and a vote of confidence that DEc are on the glidepath of debt reductions and can sustain that dividend.

It seems every set of results we show we can then the market wants to see it again at the next set, and the next set….etc!

Well not long now before a bumper IFRS quarter! But at least we know how to read the balance sheet!

5.5 years and money back in dividends!

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Trek

Bit of a sensational article to read across TILS to the wider market. I was put off buying TILS as the planned moving to US market. They had a great pf. Wish I did gran some.

However, there are plenty of other UK listed opportunities but few if any are anywhere near even one year highs let alone two year…

Up After a year and I rate as buy and holds. But still mostly down on 5 years.

DEST, FARN, DXRX, HVO, IQAI. POLB, STX (after recent run!)

FLAT

GENF, HEMO, OPTI (Even after recent run!), RENX

That’s from some that I follow but there are many more on their knees!

Biotechs are like miners. They are often run by a charismatic CEO with a dream, many are FoS, need loads of cash but most importantly ‘they’ are to get rich first even at everyone else’s expense! Few make it.

But for those that do the returns can be huge. That’s why we keep looking!

But look with an open and critical mind!

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Trek

Panama Canal…. Ships are a queuing! Nom said they would!

Rhine also low…..

https://www.theguardian.com/business/2023/aug/14/drought-causes-queues-and-delays-for-ships-passing-through-panama-canal?utm_term=64db286ce5970c505d45307bd0ad7e2d&utm_campaign=BusinessToday&utm_source=esp&utm_medium=Email&CMP=bustoday_email

Trek

Sorry link

https://www.telegraph.co.uk/business/2023/08/14/ftse-100-markets-news-uk-economy-pound-pay/

Updated 3 mins ago.

Trek