The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Have to say I’m slightly underwhelmed by the production figures.
Expected Pepper to by higher.
Might be in for some short term pain here.
Share price was only £3.05 before the deal was first announced.
Could drop back close to that. Will be a good opportunity.
All resolutions passed.
So a large part of the recent raise was taken by a non-exec director of the company (and major shareholder) and a previous major shareholder.
John Calaschi was previously under 3% before the raise (when the total number of shares was 342m). So he held under 10m shares. So he bought between 27m and 37 shares in the raise.
Gavin Mayhew bought 20m shares.
So they invested between £700k and £850k between them.
That’s big confidence from people familiar with the company.
There’s the Director’s TR1 exactly as expected. Previously held 27,157,381 share. Added 20m in the placing and now holds 47,147,381.
Now holds over 10% of the company. Huge vote of confidence.
So could end the year with £2-£2.5m in cash. Cenkos are forecasting only a £0.7m net cash outflow in 2023.
Looking very good to have cash to profitability.
Cash burn is going down because Revenues are rocketing.
£7m revenue in the second half at over 35% margin. That’s £2.5m cash inflow. Over £400k a month.
Cash burn should only be about £350k per month in the second half. And over 2 months covered by the R&D refund.
Cash outflow only about £1.2m in H2 so should still have a large cash balance at year end.
That should improve further next year as the Azerion revenues crank up to cover the $30m.
No raise needed now.
To look at cash flow another way.
Cenkos have cash costs for the year of c.£9m. So about £4.5m for H2.
Revenue is expected to be about £7m in H2 to hit the target. At a margin of greater than 35% that’s cash inflow of £2.5m.
Cash in less costs equals £2m outflow.
Add in the £0.8m tax credit and the H2 cash outflow is only £1.2m.
100 million monthly active users!
New 2 year agreement for Pubguard:
PubGuard, Bidstack's ad-quality platform, has secured a minimum two-year licence agreement with Azerion providing Azerion with exclusive representation reselling PubGuard's brand safety technology whilst also utilising the software across its group of companies;
Great update.
£3.6m cash and sounds like the R&D tax credit to be received shortly (£0.8m). So £4.4m cash.
Confirmed full year guidance of £9m. So £7m revenue in H2. That’s £5m more than H1, so another £1.7m cash in at 35% compared to H1.
So cash outflow in H2 could be only £1m. The £3.5m cash outflow in H1, less £1.7m extra cash income, less the £0.8m R&D tax credit.
Hopefully not long with the team of Protan sales reps working on it.
The good thing is the company now has a long cash runway to build up sales.
Underlying cash costs are only around £100k a month.
In the second half of last year net cash outflow was £680k.
Made up of cash outflow from operations of £640k, £60k net received from financing activities (mainly cash in from the bond issue less the repayment of existing loan), and £100k working capital outflow.
So, even with zero sales, the £1.5m fundraise should last them over a year from now. But I’m expecting sales to ramp up.
Forward selling doesn’t fit the facts.
Think it will be a transfer of some kind.
The share price has been extremely strong in the last few days.
Cenkos are forecasting only a £0.7m cash outflow in 2023 so the company shouldn’t need much extra cash, if any.
They also think that there could be additional funding options open to the company rather than equity. From their latest note:
‘Into FY23E, if Bidstack remains on course to achieve or better current forecasts, we believe there would be various funding options open to the company should additional financial headroom be required as the company moves towards profitability and internal cash generation.’
Great twitter thread on BIDS from Nick Hargreaves from Moulton Horrox, including simple actions he believes would mean ‘the share price could easily re-rate to the 10p that it should never have been below’
https://twitter.com/mhmembers/status/1540609260010328064
These are his thoughts on funding. He believes they won’t need an equity raise but could get non dilutive financing.
3) Deal with the funding elephant in the room. If they meet expectations this year, our model suggests they may not need further funding. However, given their annual report states that they do, we must assume they do, as the
market clearly has done. However, given the history, the market is also expecting another dilutive fundraising without any IR occurring beforehand. Having raised financing in the past for smaller, listed AIM companies and speaking to a former colleague who is a debt financing
advisor currently executing similar deals, I believe there is more than enough appetite from private debt funds / family offices for a non-dilutive mezz financing on the back of the guaranteed revenues, publisher deals and current prospects. If they raise, say £5m, in mezz at
even 20% rates, they can easily repay/re-finance that in 2 years with the projected growth. How much would shareholders prefer this to another dilutive raise! While they can’t just announce what they’re doing or if they even need to raise, some acknowledgement that they are
exploring all these options instead of an equity raise would provide comfort.
I welcome everyone’s feedback, but with these few ‘simple’ actions alone I believe the share price could easily re-rate to the 10p that it should never have been below
Is there a link to the presentation?
We've got the 2021 results to come first. I don't think they're particularly relevant. It was a covid impacted year and the company now has kpop.
What are people's expectations for the 2021 figures?
https://twitter.com/thesageinvestor/status/1527164561278763009
Big numbers