Ben Richardson, CEO at SulNOx, confident they can cost-effectively decarbonise commercial shipping. Watch the video here.
Stalicla also updated their website to account for the name change. This was another opportunity to ditch SFX-01, but again, they have not done so. When they raised their first round of series B funds, Stalicla noted that they plan a larger funding round later in the year (slated as Q3 24). Maybe they have been holding off paying Theracryf until they are closer to finalising such a deal.
When you consider the raise was for $17.2m, and after IND acceptance from the FDA, Stalicla would be due to pay TCF $5.5m (Over 30% of the raise), it does make business sense for Stalicla to slow STP-2 progress down to ensure they have the funds to remain solvent. Unfortunately, it is us Theracryf shareholders taking the brunt of Stalicla's decision. The delay doesn't mean the Stalicla deal is dead, in fact I would argue that the longer it goes on for the more likely it is that Stalicla are simply buying themselves time to get additional funding.
Things should move quickly to progress STP-2 to Phase 2 once/if Stalicla confirm that the $500k is going to be paid. IND is likely to be applied for shortly after the Phase 1 data has been fully reviewed as there should be little additional work needed for this to happen. Unfortunately, from Stalicla's side, it makes sense to prioritise their newly acquired STP-7 asset to Phase 3, and STP-1 to Phase 2 before STP-2 due to the payments they need to make to Theracryf.
I'm still confident that Stalicla will progress STP-2 to Phase 2, we just don't know the timing.
I would agree that the Stalicla deal is still extremely important, particularly for the short term, however I do not agree that if the deal was pulled it would be game over. With the cash available from the raise, Evgen would still have time to complete on another deal. However, Stalicla pulling out would put significant pressure on not only the share price, but also management. The lack of any deals subsequent to Stalicla would raise concerns around the likelihood of another one being competed in time before cash runs out.
I do have to agree that it seems like Stalicla wanted SFX-01 on the cheap, a feeling I had when the news first dropped of the dispute, but maybe we're being too cynical and there really is something that Stalicla believe Evgen has missed to receive the payment. And if this was the reason for the slow payment from Stalicla, I would imagine that they will now rethink as the possibility of getting SFX-01 on the cheap has passed for now. With enough cash for circa two years, administration is off the cards for now and I doubt the majority of investors would support a lowball take-over bid. An offer of a least 5p may get support, but if management are confident in their ability to ‘add shareholder value’ over the next few years, than they may not recommend such an offer to shareholders.
I do not, however, agree that losing the Stalicla deal would benefit Evgen, such beliefs, in my opinion, are fanciful at best. The Stalicla deal is only for indications in neurodevelopmental disorders and so does not limit the ability to licence SFX-01 for other indications. Throughout the rest of the year I would like to see the Stalicla issues resolved and another deal completed on for confidence to return.
Cont.
We have only paid £1m for Chronos thus far, with circa £100k paid in exclusivity fees (to fund the pipeline) and £900k as shares issued at circa 50% above the prevailing share price (1.44p/share). Additionally, these shares are locked for 18 months. Another £1m at start of phase 1, and £1.5m at end of Phase 1 paid in Evg shares or a loan note at Evgen’s preference. There is then 10% of the first three out licensing deals, again, paid in Evg shares or loan notes. All capped at £10m. The deal terms are intriguing and the jury is out if the acquisition will prove its worth to existing shareholders.
We are expanding the portfolio, which may prove a very smart move if Evgen can weather the current storm the biotech industry is facing. Valuations have been hammered across the board, and picking up new, novel compounds while the industry is in turmoil could prove to be a very shrewd move and prove very lucrative for investors. Evgen have been searching for opportunities to expand the pipeline since 2021 and seemly have undergone a long process (over the past 18 months they have evaluated 120 options) to whittle down the list before deciding upon Chronos. The new drugs acquired are in the resurgent neuropsychiatry therapeutic space and complement our existing portfolio.
I seem to be in the minority right now but I think the future is looking far brighter for Evgen after the raise and acquisition, particularly when we compare against the economic backdrop and the current state of the biotech sector in general. The importance of the two years of cash runway cannot be understated and with the market cap at a mere £3.3m, barely higher than cash in bank, I think there is real potential for a re-rate in the near future, particularly if/when we hear the payment from Stalicla is sorted, and then when IND is applied for. The pipeline assets are currently being valued at next to nothing. The past few years have been brutal, but we have cash to weather the rest of the storm. We now need management to focus on speeding up development of our pipeline and out-licencing our novel drugs. I would like to see another deal this year, in addition to a positive outcome to the Stalicla payments.
Good luck all, lets hope we see a positive resolution to the Stalilca deal in the coming weeks.
Cont.
The largest part of the raise details I do not like is that the company in currently in discussions with a number of additional investors and has asked for the ability to raise another £2m, at a price not less than the 1p placement. At 1p/share, I would not like to see any additional raise and do not see the necessity for one at this time. In my opinion, raising additional capital now would not be in the best interest of shareholders, unless there was a significant justification (possibly the acquisition of another undervalued asset(s)?).
Stalicla have not pulled out of SFX-01 as of yet, and with the cash raise giving Evgen a far stronger bargaining position I no longer foresee this happening. My greatest concern when Evgen released the payment complaint RNS was that Stalilca would play hardball knowing we did not have the cash to see out the year. As a result, by waiting, they would have been able to secure SFX-01 for a steal, either through Evgen going into admin, or offering shareholders a slightly better deal than a potential raise. However, I don’t think this is an option for Stalicla now and I still believe that they aim to progress STP2 into Phase 2 trials. If they had issues with the science, they would have dumped SFX-01 immediately. They had the opportunity to do this earlier in the year, but didn’t.
The bod have subscribed to shares which is good to see, albeit at a lower level than some shareholders would have liked. I would agree that it would have been nice if they had committed to a larger number given their salaries as a real statement of confidence, but it must be noted that employees of the company face larger losses than investors if things do go awry. Not only do they lose their investment, but their job and income stream as well. The bod are also more ridged than us PI’s, they are limited to when they can buy/sell so they are usually locked in for the long haul regardless of the environment.
The acquisition of Chronos Therapeutics is interesting and I am unsure what to make of it. It seems to have been in the works for a long time and if Huw is to be believed, pre-covid they had an offer of circa £12m, which was pulled due to the pandemic. It may be that the completion of the deal has just come at the wrong time, considering the Stalicla saga, and subsequent low share price. Huw had a few shares in Chronos so there could have been a conflict of interest and maybe this was why he couldn’t buy Evg the past few years? Possibly. However, in the grand scheme of things, is seems that Huw didn’t own a large amount of Chronos in any event. He received just over 122K Evg shares, therefore he owned less than 0.2% of Chronos.
Hi All,
It has been a while since my last post due to work and personal commitments. However, I’ll list my take on the latest news below. Apologies for the long read.
The cash raise was unfortunate and disheartening for existing holders, however, I did suggest that the Evgen would need at least a year’s runway due to the disagreement with Stalicla. I believe that management have taken the correct steps in ensuring the company is in a position should the worst come to pass regarding Stalicla and they decide to pull the plug on the deal. However, there are a few interesting points to note regarding the raise and cash position.
The raise was carried out at a premium to the prevailing share price (granted the share price had taken a real battering from the current Stalicla saga), which, in the current climate for biotechs, the bod have done extremely well. Avacta, Sareum, Oxford Biodynamics, Hemogenyx all had to raise at a discount, despite Sar and OBD share prices also taking a hammering before the raise. Several biotechs, including C4X and Redx are looking at delisting from Aim and going private, shafting PI’s in the process. The current environment for pre-revenue biotechs in general is appalling, noted by the struggles and widespread share price declines within the sector. Evgen were very fortunate to get the raised away at 1p/share. It is also not surprising that PI’s did not support the placement, with the share price already below the placement price it would have been non-sensical. However, this lack of interest from PI’s may actually benefit all holders due to significantly less dilution at such a low share price. Also, much of the cash raise is in sticky hands, and with not a lot of buying in this price region, I doubt we will see much of a sell off until the share price is much higher (unless of course some negative news comes out).
I had hoped, like most, that the Stalicla issues would have been resolved preventing the need for a raise. However, given the circumstances I truly believe that the raise was in the best interest of shareholders. We knew cash was tight, with money due to run out towards the end of the year. I’m pleasantly surprised that the bod believe that this raise has resulted in a significant cash runway into 2026. Clearly, cash burn has reduced significantly, I assume largely due to the high costs of the tablet reformulation during the last year haemorrhaging cash. Two years of cash is significant and is puts the company is a far stronger position to weather the current storm biotechs find themselves in. Not many biotechs have a single years’ worth of cash, let alone two years, with possibilities of further extending this should Stalicla pay the $500K and $5m that should, hopefully, be due this year.
Aklee,
While that is correct, shareholders do rank last, the PLC, the company you have shares in is not in administration in this case. It is a subsidiary of the PLC, MDL (Made.com Design ltd), that is. This company structure changes things significantly for shareholders and even though shareholders rank last, the PLC has no significant creditors or payments to make.
Also note that the PLC is actually the largest unsecured creditor of MDL (With over 50% of total monies owed, circa £87m), so will get a chunk of cash (if anything is left over - current estimate of 1.6% puts this figure at circa £1.4m, or 0.35p/share).
The last accounts viewable on companies house show that the PLC has £5,803,990.78 of cash in the bank as of Jan 2024. They have no significant outgoings, no creditors to pay so they only payments that will need to be paid will as part of the liquidation process. During Jan 23 - 24, this amounted to circa £125K.
According to the declaration of solvency their best estimates of cash left at the end of the process, when the PLC entered the MVL (Members voluntary liquidation), was £5,659,997. Trade creditors settled for approximately 50% of the total owed, and the cash is now in an interest bearing account hence the slightly higher figure of cash in the bank at Jan 24.
It is, therefore, highly unlikely that the cash left for shareholders will be under the original estimate of circa £5.66M as the remaining cost of the liquidation should amount to less than £150K as there is very little for the liquidators to do. Therefore, shareholders should receive at least 1.4p/share. Note, that this 1.4p excludes any payment as a creditor of MDL, so the actual figure paid to shareholders is likely to be higher than this.
The company structure has, somewhat, saved investors here and will provide them with something. Although for most, the payment of 1.4-1.75p will still result in a massive loss. But the figures the company have provided, indicate the payment will be higher, not lower, than the 1p originally stated.
Unfortunately things aren't looking great. Stalicla have removed the statement suggesting that STP-2 will be entering Phase 2 this year. Their website, updated recently, now say "Phase 1 data is currently being evaluated to support further clinical development into phase 2 trials." So there is no longer any mention of entering Phase 2 this year. This change, to me, speaks volumes about the relationship between the two companies and indicates Staliclas intentions.
It is, regrettably, becoming more clear that Stalicla likely have no intention of paying Evgen the money they are owed in a timely manner and are delaying it as long as possible, knowing Evgen will be under financial pressure come the end of the year. It is heartbreaking to say this, as the science has not changed, and I still believe a lot of money will be made from SFX-01. However, it is looking more and more doubtful that us PIs will be left with anything.
Evgen really need another deal to force Stalicla's hand, but the reality is that this is not likely given the situation. There is still the possibility of an opportunistic offer coming forth though, and I would say this is more likely than a traditional deal, given the pitiful market cap and dire situation Evgen is in. While under most circumstance a buyer would wait for administration to pick at the bones, the fact that Evgen still have the Stalicla deal (although its future is a bit more uncertain given recent events) then a buyer may wish to buy the company to out manoeuvre Stalicla. I still think Stalicla believe in SFX-01 as they have not dropped it, however, they want it at next to no cost.
Given the circumstance I don't think a buyer would have to pay much, under £10m would likely secure it, as the only alternative is mass dilution (the company would want at least 6-12 months cash, so I'd expect at least a 50% dilution), a convertible loan note (death spiral) or admin.
Hopefully though, this spat with Stalilca will be cleared up and Phase 2 will still happen with the $5.5m saving Evgen from this fate. If it does go to admin, then I'm sure I'm not alone in the fact that I'll be saying bye-bye to tens of thousands of pounds.
I think that the 1p/share is an underestimate based upon the latest evidence, with 1.75p possible if there are no surprise costs.
The Declaration of solvency issued when Made.com PLC went into MDL (23rd Jan 2023, viewable on companies house), showed estimated value after debts paid of £5,659,997. This included the estimated costs of winding up and was all cash at bank.
Payments from MDL administration were not included in these projections. The PLC is the largest unsecured creditor of MDL, with approximately £80m being owed (approximately half). If we assume 1.6% is paid to creditors, we can assume the PLC to be paid circa £1.28m from the administrators. Note 1.6% is the current estimate from PWC, viewable on their website as well as their latest update issued in November 2023.
In total, the PLC should have circa £6.94m after payment from administrators. Divide this by 395m shares in issue, we reach a payment of 1.756p/share to shareholders of the PLC.
This has omitted unexpected costs that may have accrued, but also interest payments on the cash balance. So it is reasonable to presume shareholders will receive more than the 1p initially outlined.
Dates of payments to unsecured creditors has not yet been issued, however, secured creditors have already been paid in full and preferential creditors are due to be paid on the 15th March. I would expect payment to be made to unsecured creditors towards the middle of the year. Once paid to the PLC, it should not take long for this to be distributed to shareholders.
I'm of the opposite view. The situation now is very bleak and the investment case is at it's weakest. Having to issue a formal notice to your partner, for a relatively small sum, especially when they have just raised 35x said payment, is bad news. Normal proceedings would have meant that the two companies would have had discussions regarding the payments. These discussions were clearly not fruitful for Evgen, the question is why?
If Evgen get the entirety of the $5.5m, the entire investment case improves dramatically. In my view, this would not be the time to sell as Evgen will have the funds to see out the Phase 2 trial, with cash likely to last into 2026. There will therefore be plenty of time for future inflection points in the share price and I would imagine one of the milestone payments would be on positive Phase 2 results. This will also enable the bod to advance the other indications in the pipeline and seek additional partners.
One thing to note is that in the event Stalilca try to play hardball, I would imagine that there would be a lot of support from existing shareholders to fund a cash raise, particularity the likes of Kight. With the current deal in place, and with Stalicla still seemingly interested in SFX-01 with half their DEPI platform dependent upon it, I cannot see Kight wanting to take the hit of over £1.5m, when he could either buy the company out, or finance through a placement.
Also, Stalicla would want to progress to Phase 2 as quickly as they can, even if their intention is to take SFX-01 for next to nothing. The delays will be costly for them, as well as for Evgen.
If the bod can reduce costs and get a raise away to extend cash into 2025, that may be enough time to force Stalicla to pay the $0.5m. This payment would add additional time for Evgen to either find another deal/buyout, or force Stalilca to carry on with progressing STP2 through IND, leading to the $5m payment.
CJ
As investors we must respond to the latest news. Up until the RNS on Friday, there was no reason to doubt that the $0.5m payment from Stalicla would be paid and I had expected this to be imminent due to their cash raise. And, by extension, there was no reason to doubt the progression of STP2 to phase 2 being carried out as quickly as possible, thus leading to the $5m payment for IND.
I still believe SFX-01 is a very promising candidate for the possible treatment various indications, the science has not changed. However, the business case for Evgen unfortunately has.
The relationship between Evgen and Stalicla is not as stable as it previously seemed, a relationship that Evgen's future currently depends upon. Unless Evgen can net another deal, or find a buyer, they are still at the mercy of Stalicla, something that was not concerning until the Friday RNS. Even if we see a swift resolution to the $0.5m payment, I will continue to remain more sceptical of Stalicla going forward.
I unfortunately see the share price continuing to slide on the recent developments, which, as a current holder is not a great thing to see. It will be sad if Evgen don't make it, and I stand to lose tens of thousands of pounds. The science could go on save many lives, but even if I lose my investment here, I hope it is successful. After all, money comes and goes, but genuine life-saving treatments are few and far between and we never know what the future has in store for us, maybe SFX-01 will be used to help treat us or the people we love. It would be immoral of me to want a treatment candidate to fail for selfish and egotistical reasons such as losing my entire investment here, after all I knew the risks.
Got to hand it to you Alf, you did call it.
Although it is not over for Evgen, it is not looking great. Stalicla are legally obligated to pay the money to Evgen, however Evgen do not have the funds to support a drawn out and lengthy legal battle, nor can they afford to lose the Stalicla deal at the moment. Stalicla would still owe the money to Evgen in the event of administration and the administrators would ensure they get the money that is due.
Hopefully it will be resolved quickly and amicably and is simply a misunderstanding. However, the risk/reward ratio has now changed, and Evgen is a much worse proposition than a week ago.
The science is not in question, I think this is something we can now all agree on. Stalilca still believe in SFX-01, and all evidence points to them wanting to progress STP2 to Phase 2 clinical trials. However, I am no longer as confident that Stalicla are going to play ball and pay Evgen, or apply for IND, in a timely manner. SFX-01 may continue, but will current shareholders be left out?
Currently considering selling some of my shares to reduce my exposure.
Very disappointing news. I'm not sure what is going on as it's not like Stalicla don't have the funds available.
The company not responding to, or even acknowledging, reasonable questions would definitely indicate they working on something big and not just that fact they have don't give one iota about PIs.
If they actually cared about their private shareholders, they would have the common decency to at least acknowledge their questions and emails, even if they were to say something along the lines of 'unfortunately, we cannot comment at this time'. That acknowledgement alone, while not overly helpful, would go a long way for many private investors because it shows the bod care, at least enough to respond.
The bod responding in a manner that highlights their contempt for PIs, demonstrates they are only in it for themselves. Sure they, and IIs, may hold a decent holding here, but that doesn't mean that they won't want the share price lower for a cash raise. If I was a CEO of a PLC, and I didn't give a toss about my PIs, I would want to raise to be as low as possible so I, and my II pals, can buy as many shares on the cheap, squeezing out PIs in the process.
The bod had a fair opportunity to raise cash late last year, on the back of the rise from 10 to 30p, but choose not to. Any decent bod, who knew cash would be tight within six months, would have looked to raise on the back of the pump. Instead, OBD put out a sub-par trading update and have seen the share price crash 50% in three weeks, putting the company in a precarious situation.
Https://www.bbc.co.uk/news/uk-68208157
Sad news this morning hearing that King Charles has cancer (not prostate), wishing him a speedy recovery.
Lets hope this highlights that cancer does not care who we are, what we do, how influential we are or how much money we have, we're all at risk of these dreadful diseases. Maybe some good could come from this tragic news, and this leads on from the moving article posted by Prion on Sunday. More investment and money is needed to fund the research and development of new, novel drugs and treatment options for these debilitating illnesses.
Whilst it is still unclear the type of cancer he has, we know it is not prostate. Evgen are working on treatments for a few cancer indications and lets hope this awful news helps to breath life back into the UK biotech sector, as companies like Evgen will be pivotal in the fight on cancer.
Wishing you all the best Charles.
Not looking pretty here this morning. Guessing your stop loss got triggered alamo. The drop is overdone imo but these markets are absolutely brutal. No strength in the share price and a background seller so I'd expect it to continue to drop in the short term. Glad I didn't top up last week but it is starting to look very cheap, particularly for a long term hold.
I'll observe the price action this week but want to top up at some point.
Prion,
Thank you for sharing that link, it was very thought provoking. I think everyone can agree that better treatments for patients of such awful diseases cannot come soon enough.
Sure, as investors, first and foremost, we want to make money. However, part of the attraction of small biotech as an investment is the potential positive impacts they can make. Supporting fledgling pharma companies can be very rewarding, both financially and emotionally and I’m hopeful Evgen will demonstrate this.
If successful, SFX-01 could go on to extend the lives of sufferers of these dreadful illnesses and is why I cannot fathom why some disgruntled investors here are hellbent on Evgen failing. Making up lies, spreading misinformation and mis-representing the science all because they sold at a loss and they’re on an ego-trip. Wishing for a company that are focusing on creating treatments that could save lives to fail is truly appalling and highlights the flawed character of such people.
Let's hope we hear positive results on the Glioblastoma front from Evgen, as well as the other indications we have in the pipeline.
Nice one DS. It would be great if we get some news on Monday. News on IND application would be fantastic.
I would agree that the drop is over done, however that is the markets for you and it poses investors with a great opportunity to buy at lower levels.
I think a number of a number of factors are contributing to the negative sentiment are seeing at the moment. The overall sentiment of the overall market has been very bearish for a while and we have seen crazy, undeserved drops on many stocks.
The M3 delay - whilst there is no direct cost to Destiny for additional trials, it will still have a financial impact on the company as the milestone payments will not be paid as early as expected. In the unlikely event of no deal for XF-73 this year, the delay in M3 would lead to additional cash being needed, and this would be through a placement.
The lack of any update on XF-73 nasal - many, myself included, have been expecting such a deal to be announced imminently. The lack of acknowledgement or update has probably caused some to sell out.
However, while the M3 delay is frustrating, I don't think the extent of this drop is justified. The company have not indicated that the XF-73 deal delayed, so it is reasonable to presume that talks are still ongoing and we can expect an update in due course.
I will be adding more at these levels over the coming weeks.
So Chadster - when is your TR1 dropping?
Because the numbers of shares you are suggesting you hold means you are legally required to notify the FCA of your holdings. I look forward to seeing this appear in the next few days.
Or are you lying about your holdings to decieve others into buying this lifestyle pish?
Again, Echo have next to no assets, £5.1m net liabilities, have diluted shareholders over 50% for a pathetic £300k. But keep ramping.