Mereo Biopharma Share Discussion Threads

[escapetohome] 29/5/2020 12:36

FOCUS ON FUNDAMENTALS

Regardless of whether a business has a large overhang over it or not, it has to be a good business to consider investing.

As Brown says, ‘valuations trump overhangs’ every time. (DS)

[escapetohome] 29/5/2020 12:35

Alternatively, if an investor is looking at an entry point to a company, a large share overhang may be good news if it leads to some short-term weakness in the share price. Once the market has digested the available shares, chances are that the price may start its upward descent again.

[yasx] 29/5/2020 12:30

Swinsco,

Good point - one which I have thought about - there has been a rumour that one or more parties might be interested - see my earlier post. But, for now , nobody has stepped up and unless they do this overhang presents a major issue.

[yasx] 29/5/2020 12:29

OAP,

Thank you for that. Yes I had noted that, this delays the timelines a little - but in the scheme of things it is not one that alters the overall case for investing in this company. One would expect that whether the trial take 12 or 18 months or even 24 months from here, in the interim partnership/funding deals will dictate the trajectory of the shares.

[escapetohome] 28/5/2020 10:27

No one is taking the stock up at this precise moment in time, so the price fell

But it is positive newsflow that will drive the price higher, as risk will be reduced, and that will be recognised in the share price.

NEWS.

[swinsco] 28/5/2020 09:49

Exactly that. The question I ask myself, is why no buyers. It can turn on a sixpence as is the nature of the sector, but, as no one is taking up the Woodford and co stock, it has me wonder....though it's good to wonder as it keeps the mind on its toes.

[the stigologist] 28/5/2020 09:46

Is Yasx's £100 buys not enough to quench the Seller ?

[escapetohome] 28/5/2020 09:41

Unfortunately a seller is creating this supply, and in these cirumstances the price can only fall if there are not the corresponding buyers

[escapetohome] 28/5/2020 09:40

Yup , every dog has its day though!

[swinsco] 28/5/2020 09:35

Jeez. Like Phar, this dog doing what it likes doing best - going down.

[the stigologist] 28/5/2020 09:03

The Inconvenient Truth

[oapknob1] 28/5/2020 08:52

Yas thanks for your insight. Did you see the Form 6k 28/4/20. As announced - Phase 2 alvelestat trial will be delayed with topline data now expected in 2021. We are also currently planning to initiate a Phase 3 study in children with OI in late 2020, however, the initiation of the study may also be delayed.

[escapetohome] 26/5/2020 09:17

Yasx , an excellent summary.

No contrary view to the above whatsoever.

Im holding 20,000.

[yasx] 25/5/2020 20:01

It appears to me that some are perplexed by what MPH is all about. Allow me to elucidate by providing a brief precis of both the risks and potential reward here...

In essence, this is not a get rich overnight share, although I opine it has been heavily sold down and there may well be a sharp rebound. But, I am certainly neither banking on nor hoping for that (indeed, it would suit me if it were to continue to decline since I would be able to accumulate more going forward at lower prices). Be that as it may, there are in my view various reasons as to why it has been sold down, as follows:

a) Link/Invesco disposing of their shares. At the time of writing they hold 15.2% and 12.9% respectively, and I think there is every reason to assume they will continue to offload - this will serve to suppress the price of the shares unless...

b) unless Acacia (or another outfit) take out the aforementioned overhang. It has been rumoured in recent months that Starboard have given Acacia some $400 million to make a few acquisitions and that one of the targets has been the remnants of Woodford's previous holdings (which includes MPH). There has been a vague rumour in the press that Woodford himself may well be interested. Irrespective of who might take up the slack, this would be a positive development for the shares since it would remove the overhang that is suppressing the shares.

c)The Co. has a very high burn rate - that is not a surprise since outfits of this type do incur considerable expenditure to prove up the potential drugs. There is the prospect of further funding.financing this year, but this might not just be in the form of equity issuance but different financing arrangements are also likely. The Co. has recently entered into two financing deals earlier this year and undoubtedly there will be more either in the short term or later this year. The nature of those deals will impact on the shares, favourably or otherwise (I suspect favourably since given the potential of the drugs any equity raising will surely not be contemplated below the rpice paid by the recent US institutional investor and partnership arrangements will be most welcome - Navicixizumab was earlier this year licensed to Oncologie for approx $6M upfront and up to $300M in future milestone payments/royalties).

d) Targeting further drug acquisitions which at this stage I would prefer they left alone - they have enough to be getting on with and it only needs one strike for this to go into orbit. The key offering is Setrusumab for osteogenesis which has thus far demonstrated positive output data notiwthstanding a failure to meet the primary endpoint (I know that sounds rather silly, but not so when one considers that subsequent to the Phase 2b they are now embarking on a Phase 3 study pursuant to guidance from the FDA.This will take at least a year so nothing to get excited about regarding this study in the very near term. Make no mistake, this is a binary bet with no certainty of success, but, if they pull it off....

e) They also have Alvelestat, with potential for a rare respiratory disease , at Phase 2 stage - we should get more on this at some point this year.

All of this consumes cash, as explained above. The exact cash position is not known since the last stated amount will now be dramatically different, although I expect they probably do not have a substantial amount and will likely as pointed out earlier require further funds this year, the form of which is not yet known (at least not to me). I think they have demonstrated a good track record of entering into partnerships and the ability to raise cash via equity raisings (I would not like to see placing at or around this level since I think this undervalues the potential of the product portfolio. One factor I need to consider in more detail is the track record of the Board - I personally have not invested in any outfit they have previously been involved in, and aside from having reviewed their profiles have nothing further to say on that aspect for now. Incidentally, I was not overly impressed with the Proactive interview with the CEO (she did not strike me as being very capable, but then, perhaps that was just my assessment of it).

In summary, do not expect drug success overnight. Do bear in mind that these offerings need expenditure, and currently they are not fully funded to commercialisation. But, the shares in my view do not reflect the potential of the pipeline and I think once this overhang clears, and with an announcement or two relating to further financing arrangements, this could well double or treble this year before any potentially epochal development relating to any of the study outcomes (and particularly Setrusumab emerges. That is how I intend to play this - I will sell some when the shares on the way up (for so I assume) and hit my assumed double, treble or whatever price point ahead, and then I intend to run the rest as free carry and see if they have a successful outcome on any of the offerings. IN short, I think on potential these will race higher at some point, I will then sell sufficient amounts to preserve capital allowing the rest to run contingent upon study outcomes.

In this way I suspect I will have a free carry that could potentially be a 20 bagger plus from these levels.

I welcome counter bearish views, since these are far more preferable than bulls merely echoing the same. I like to critically assess any share I hold and well constructed bearish views are certainly invited (numpty Stig need not bother). Incidentally, I rarely change my view based on what others suggest but it is never a bad thing to review the merits of an investment based on any critical analysis.

[oapknob1] 22/5/2020 21:45

Interesting in RNS re agm - a pivotal Phase 3 study design in paediatrics has been agreed with the FDA and EMA.28/2 RNS - stated agreed in principal.

[trek3] 22/5/2020 15:15

link and invesco have 35mil shares between them,
there was talk of someone buying their holdings,
until then, it`s going to be bumpy.

[escapetohome] 21/5/2020 16:52

Any indication yet that they may have stopped?

Just trimming their rholding?

[tomboyb] 21/5/2020 16:24

There is your seller -

[the stigologist] 20/5/2020 23:19

Is 'sagacious' another word for 'nonce' ? Maybe someone with a thesaurus can let me know.

[yasx] 20/5/2020 23:01

Anyway, enough of exposing fools. Back to MPH. I will contribute to the other thread as and when I feel it opportune to do so.

[yasx] 20/5/2020 22:53

Dave,

Not so. I took AVCT at 19 shortly after they announced the placing at 18p - I distinctly remember Stigologist ranting about the placing and that the Board could not be backed and that he would never invest in anything they were involved in since it would never yield anything. I jest not.

I no longer hold AVCT since it appears to me detached from reality at this price and those buying at this level might learn the hard way.

[dave4545] 20/5/2020 22:49

Well before he got all crazy he was very long and bullish on Avct below 20p so yes he does call them right. I too was long on Avct sub 14p...sold 19p...now over 150p let that be a lesson to ride those winners eh

[yasx] 20/5/2020 22:44

Dave,

You are entitled to sell and there is no reason for anyone to question what you do. Every investor has a different risk profile and personal circumstances vary which also dictates why one might sell or reduce.

I will contribute to the other thread since giving Stigologist a wide berth is a must. He is equally daft on the forum of another stock I hold (DDDD) - a low IQ, poor schooling and uncouth antics is an abhorrent combination and one which a sagacious chap like myself seeks to avoid.

I remain very confident about MPH - my only concern is that Stigologist might declare he is long, since I do not recall him ever getting anything right! But then, on this occasion if he goes long he might get his first success, thus providing support for the principle that the exception to the rule proves the rule itself...