The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Just twigged our closing SP 685 is half the target price reiterated by Numis today of 1365
Porky - everyone has read the broker note & the SP is the same as start of the day, starting with a 6.
The economic potential ought to be valued more in line with the broker note & my point is about how that is brought about. We know other companies are more presentation than delivery, this one has had great/world class delivery through a period that it needed to be focused but that has made the SP swing in the wind. There could be less lottery in the swings & it would make the investment more attractive than requiring faith that the market is wrong.
exactly donn!
Kaeren & so many others here are doing some wonderful spotting what is happening such as the enlightneing post below about involvement with Brazilian National initiatives but. why do they have to do it? what concept should we have of how it supports the P&L this year? Involved with such a forward looking enterprise is fantastic but they could make so much more of their commerciality. We have to guess what'll come out of the black box next
But it has a huge disadvantage to shareholders in not having visibility of future income.
Contributors comment about SHs being over demanding of updates. A business ought to get on with its activity & this lot have been making world class headway in the heat of battle on the other hand what can any investor tell about income? There would be a basis to estimate in most situations, what we have here is a request for blind faith. No one can tell the outcome of a negotiation and the demand for capacity outside that negotiation is simply unknown. What would the lag be before finding a new customer base? have they got one already? we just can't tell so the market can't know what NCYT may be worth going on information available to PIs without some dark art of divination, like something out of the dark ages, so of course the SP will drift down until an RNS arrives to shed some light. This isn't how a businesses make best use of their access to support.
.The SP would go up if the market had a way to know that x research led to y revenue (by a pre-order or research data or even their estimate) but otherwise, & when they can't estimate, it will drift down until notified of some commercial benefit to the contrary
Wilson
I love the research here, it is amazing, but what I like doesn't determine the SP. Cash in the balance sheet or expectation of cash calls underpin or undermine the SP but market valuation is based on a business's FUTURE cash flows will be discounting for time value of money, risks and adding expectation of growth.
The figures in Dec were stunning. My spreadsheet was by great luck & was only 3% different. I was able not to be that bothered by the drop in SP after vaccine news in Nov but I am not in that position now. I have a best guess for 2021 but it is only my best guess. The "visibility" or reason for a guess over a huge proportion of the income stream is just not available for the market. We, you & I, may feel it will work out fine. Another RNS will land on 28 March, like a bomb, worth millions (though we can't guess how many millions). The rest of the market are thinking "we don't know what to expect, its not zero, but what is our lowest estimate?"
Businesses build out their base out not to be reliant on a single contract so the market can extrapolate what future revenue might be even if it is based on future contracts. The size and materiality of the DHSC contract means smaller sales are below the bar for notifying the market so we don't know if & how much a trade in machines is within grasp if the DHSC number is less than NCYT capacity. This means our eggs are in one basket, albeit by a deliberate choice, that brings the SP down until expectations are reset for that contract.
The reality is the SP will drop because the company prioritises research over commerce.
It needs to be run more like a business or it will be constantly under valued & eventually be bought out or fade away when advances aren't in demand. Imagine what AVCT would make out of the opportunities NCYT has, would they wait an extra few months if they had the expertise to release a LFT while their largest contract was coming to an end?
The shame is that NCYT is currently a business with a one client sizeable enough to require notification of the market and without a track record of other business large enough to draw attention from the end of its current contract.
Commercially run businesses would have their LFT released & selling before devising the next world leading innovation. Advancement seems to take precedence over sales & makes NCYT ripe for bolting into a commercially run business rather than them trying to devise a medium term strategy. They would have a strategy already in place if that was their skill set, instead we have world leading variant tests. Q: Why wait until Q2 for mid term strategy? A: they'll probably have come up with another set of stunning tests by then instead.
That is a good point.
NCYT must be aware that they indicated a scale a Phase 2 might have. A change one way or the other would be significant enough news to be announced IMO.
Good to have some news
It seemed to me the RNS acknowledged the need for a business strategy in the longer term. This has been a market about whether a test worked well enough or now. NCYT was able to throw all its capability into the national effort through the DHSC. The DHSC has developed its requirement to include large scale purchase of LFTs and the discussion of Phase 2 back in Sept has not (yet) materialised into an order. Other businesses in true mid Cap sense would have a track record of different income streams that would balance out particular contracts but as we know our SP has almost halved on almost two occasions through uncertainty over the focus NCYT has. It is very good news to have a strategy announced and as actually NCYT might sell all its capacity many times over if it did not choose be so closely aligned with the DHSC but the market can not value it accordingly without evidence of that.
Got the figures a bit wrong
H1 21 cash with no sales would be YE 20 92 + collection YE debtors 69 = 161
If we add cash inflow H1 21 from EBITDA 140m as 74m = cash balance H1 21 235m. perhaps 160m today
Cash backs SP today by 2.10 p share
If
Cash was 18m H1 + 74 H2 = YE 92m
EBITDA was 44m H1 + 143m H2 = Yr 187m (& notwithstanding the notion of 80% conversion of EBITDA to cash)
You can see that creditors or loans had been paid off out of H1 cash flow or debtors built up of 26m (44-18)
and in H2 74m had been added to cash from EBITDA 143m so trade debtors had built up or other outflows of cash = 69m
H1 21 should have cash flowing in as debtors are collected of the 69m if there were NO sales at all or lets say about 143m (69+74) if we take HALF of the low end of Soder's prediction of EBITDA for YE21 of 280-300m and assume revenue was as much to the end of H1 21 as it was in H2 20.
拢187m is about 2.60 per share, today's share price 6.50 must be supported by at least another 拢1 implying the underlying business only has an economic value of about 3.00 per share or less than 250m in all which can't be right.
Tractor unit looks to have same registration as on 19th - XL 09 RAW, not sure if that is good or bad or how else can photos be distinguished without dates on them
I find it hard to take BRH seriously when AVCT has taken so long to not yet be approved (I could be wrong)
If it was as easy as BRH imply wouldn't have already been done?
I modelled rollout starting on the contract commencement date (see footnote to the redacted publicly available version of contract described on RNS 29 sep by NCYT) & came within 3% of the revenue figure indicated for YE 2020.
Q lucky but it showed you'd have to miss huge revenue from other sources for the majority of the DHSC contract SALES of instruments not to have happened in 2020.
Note the aspects of the contract were - SALE (i.e. transfer of title of q16 & q32 equipment), training, service (warranty of equipment function) and supply of REAGENT used to test. Most of the 拢100m in my guess would be on run costs, like reagent, that are a function of test volumes but most of the 拢250m was a function of the number of instruments delivered i.e. sold.
The 10 week extension comes from the RNS description which differs from the legal version. Legally contact started 28 sep , runs for 4 months to end 28 Jan (date of subsequent RNS more or less) with 2 months extension at option of DHSC (to 28 Mar & my guess at next RNS on this).
The way my model worked suggested 300 sales happened with training & deployment but we can not tell what the function of usage is, nor what the "拢100m" will turn out to be. They have mentioned deployment of PROmate, not mentioned back in Sept, so it may also be from a numbers point of view that additional sales have been made of PROmate but the volume of reagents (use) has been less than it might have been.
I procrastinate over buying a laptop or a car & then getting the hang of using them.
Procurement of hundreds of machines for use by hundreds of people in different locations in this tumultuous pandemic is fraught with problems. On this BB a contributor called Poidster has made some insightful posts IMO about how NHS labs actually work, sitting on their normal workload, a new machine arrives that they must master in the heat of battle and it is a polymerase chain reaction (PCR) test to detect genetic material from a specific virus. How many of us know what cooking up & cooling down is involved? The analyst must respond best to the simplest user friendly of machines but has one designed from research labs in under a year & probably faces more complexity in process to get a state of the art result.
Ncty seems to be "plugged to the top" in dealing with this crisis. We have seen that big pharma can not keep up with Ncty on the cutting edge of testing. On the RNS 29 Sep, Ncyt referred to discussions on phase for 700 machines. They showed commitment in the national interest not just of a small part of their productive capability but transformation of it many fold. No doubt they have exceeded norms in responsiveness and their testing panel for variants leads the way but we are still stuck with testing being a "big" job needing instruments that take pressure away from NHS analyst workflows. IMO that is the issue behind delay on Phase 2 announcement & the opportunities our company has.
Al - appreciate your post, refreshing break to the pelvic thrust approach. I think this investment for all its opportunity is a poison chalice for PIs because of its corrupt governance & gruesome overhang.
Thanks, that's as I understood. I'm non resident & don't want to own stuff in the US
Q good day - have a good weekend everyone
Have I got this wrong? I took it that my UK investments remain the same. A section of the RNS 22 Oct about the merger consequences copied below with final bit saying DDDD remains as the AIM ticker. I imagine no change anything - no US holdings nor implications for ISA or SIPP tax wrap in UK. Is that wrong - will we be issued US equity in the form of ARDs on Nasdaq in LOAC?
"announce the proposed combination of 4D and Longevity (the "Merger"). Upon Completion of the Merger, 4D shall be the surviving entity and the shareholders of Longevity will receive American Depositary Shares representing 4D Ordinary Shares.
Highlights
路 The Merger is priced at an agreed valuation of 拢1.10 per 4D Ordinary Share, representing an 18 per cent. premium to the 拢0.932 Closing Price on the Last Practicable Date.
路 The Enlarged Group expects to launch a new American Depositary Receipt programme and will apply to admit its American Depositary Shares for trading on NASDAQ (the " NASDAQ Listing"), under the ticker symbol 'LBPS'.
路 As a result of the Merger, the Enlarged Group will benefit from the US$14.6 million cash held by Longevity and backstopped by supportive investors, extending the current operational runway into early Q3 2021.
路 Immediately following the Merger, 4D Shareholders will own approximately 86.9 per cent. of the issued share capital of the Enlarged Group (based on the current issued share capital of 4D and Longevity).
路 Immediately following the Merger, Longevity Shareholders will own approximately 13.1 per cent. of the issued share capital of the Enlarged Group (based on the current issued share capital of 4D and Longevity).
路 4D will also maintain its current listing on AIM, under the ticker symbol 'DDDD'.
the SP is the story
you might be right, we just don't know what the revenue will be. the company gave guidance that has not followed through. a pandemic has been on in the meantime & they have said negotiations are continuing so we can not know what the outcome will be - its speculation for the time being