Neuropharm Share Discussion Threads

[lombiff] 25/3/2010 20:53

Liarspoker - thanks for the suggestion, but I don't think they need any more "pressure". I negotiate the sale of big ticket items (many times bigger than the value of NPH) for a living - when I'm in the middle of a negotiation (which usually takes months, and in some cases years), I wouldn't want the other side in the negotiation to know my position because I had to announce it to our shareholders.

I don't know for sure how our BoD is doing, but the announcement that we'd consider voluntary winding-up looks like a shrewd move to put a floor on the bid price, and also to try to inject a little pace into proceedings (as others have said, the potential bidder could be dragging their heels in the hope that they pick the whole lot up from the receiver for less than the cash value).

Hanging in there!

[mike111d] 25/3/2010 20:45

Lombiff, the reporting arising from the bid situation makes perfect sense. Generally speaking, whilst they are well intended you can typically drive a bus through the disclosure guidelines. As you say it is the duty of the shareholder to make the disclosure which in turn will trigger the holding release and so if the shareholder stays quiet then it is difficult for the company to do much about this, unless of course they know of the holder and a change in their circumstances. Thank you for clearing that up though and again all the best with your holdings here.

[lombiff] 25/3/2010 20:31

Mike - as I now understand it, under the current rules, and assuming a company is not in a bid situation, a holding has to be disclosed by RNS if it's more than 3% of the company. However, if your holdings are in nominee accounts, then you don't have an obligation to disclose, but Barclays (or whoever) does have to do so if the aggregate holding in all their nominee accounts is more than 3%.

However, all of that changes if the company goes into a bid situation and is therefore on the "list" at the Takeover and Mergers Panel (in which case there should a Rule 8.3 announcement as there was in NPHs interim results statement on Tuesday - which is when I noticed it and made the call to Barclays). In that case, if your total holding (including nominee holdings) is more than 1%, then the reporting obligation transfers to you, as you control the disposal or purchase of the shares.

Under the current rules, if you hold more than 1%, you only have to disclose any further trading after it enters the bid situation. So, if you hold 2% of the company when it goes on the "bid list" but you don't buy or sell any more, then you don't have to disclose. However, from April 19th, the rules change and you would have to disclose your holding (if more than 1%) to the Takeover & Mergers Panel and also via RNS at the time the company goes into the "bid list", and also any subsequent trading you do.

I'm not a professional investor, so I was taken by surprise by all this. I'm going to get my wrists slapped by T&M - I don't know what form that will take yet, but I've been warned that there are various sanctions for such a breach of their rules. Hopefully, my experience will help others avoid falling inadvertently, as I did, into the same trap.

Incidentally, the Compliance guy at Barclays was excellent - extremely helpful.

All the best for now

[mike111d] 25/3/2010 19:47

Your continued support of the company is laudable and particularly as this is clearly not driven solely by the desire of financial gain. I really do hope that it comes good for you and consequently the company.

This is also good feedback, as I make a point of keeping stock holdings broken up across different nominee accounts with Barclays but I had not appreciated that they might be wising up to such matters.

[liarspoker] 25/3/2010 19:47

No one better to put pressure on management than yourself by the looks of it Lombiff. ;o)

[lombiff] 25/3/2010 19:38

warwick/hadron et al

Well, if there was any doubt about my buy of 30K at 9.83p on the 23rd (and all the earlier buys), I assume my RNS clears it up!! Had assumed I didn't have to disclose as my holdings are in nominee accounts, but Barclays Compliance put me straight!

Now you can all see the terrible truth of my exposure to NPH - I even had to tell the wife!!

As you can see, I am "trapped" here, but the truth is I still like the story - someone has to try to do something about the increase in autism, and it seems to me that NPL-2008 could still have a role to play. Now just have to wait for the outcome of the DD and bid.

I still believe that the worst case scenario gives a decent upside for anyone buying at these levels (sadly not for me at my average), but what do I know?

All the best to all longs - hanging in there and now RNS-ing any future trades!

[warwick69] 25/3/2010 14:37

quite agree boobly the sooner this is sorted the better i would like to move my capital into something with better prospects been locked in here far too long now.

[boobly] 25/3/2010 13:49

"..........joining a new outfit that acquires some of the IP is always a possibility in these situations....."

THAT would be as step beyond `Inappropriate` , if it did not include the interests of ALL shareholders .

[mike111d] 25/3/2010 13:39

Boobly, I would not assume that the BOD are acting inappropriately as market conditions are tough, with major reorganisations within the larger pharmas delaying decisions and deal making which will not have helped here. Clearly though the BOD are only human just like the rest of us and will no doubt be considering what their next move might be and joining a new outfit that acquires some of the IP is always a possibility in these situations.

[boobly] 25/3/2010 13:34

Mike :....A perfect illustration of what I mean by a `Nasty Smell` !
Presumably if the IP is held by an a legal entity shareholders will reamain equitable owners , and at that stage we will see what changes there have been amongst the major holders .
If I was at all cynical about this , I could easily be led to believe that Directors knew all along that they would never bring anything to the market , that the fund raising has simply bought them time to sort out THEIR affairs , and ensure that there is enough funding in place to address their not inconsequential contractual rights .

[mike111d] 25/3/2010 13:33

Sadly warwick69 that is the way it goes, you make sure that your service agreement provides you with a safety net in a situation such as this or to protect you from the company deciding that they might like shot of you. For many small companies they quite often find themselves in a situation whereby they may want to oust a CEO for example but they simply cannot afford to do so, it might sound crazy but it is true.

[mike111d] 25/3/2010 13:23

Thinking about it, some years ago I invested in a biotech which despite seemingly good progress and press it ended up folding, thankfully the only one I have held that has folded in this way to date. And surprise, surprise within a few months of this occurring the IP had been acquired by a company in Singapore and the ex CEO was duly appointed as CEO by the new owners of the IP.

[mike111d] 25/3/2010 13:17

Boobly, quite simply you stick in an offer to the administrator for the IP that interests you. Given that any IP would require significant cash being spent on it to get ready for market, the IP would not command a particularly high price.

[boobly] 25/3/2010 13:14

This is clearly out of date :

Name of holder Number Percentageheld

Dr Mike Hudson 1 3,940,000 12.49%
Dr Mike Snape 3,440,000 10.91%
Scottish Widows Investment Partnership Limited 3,033,062 9.62%
Schroder Investment Management Limited 2,900,000 9.20%
Cazenove Capital Management Limited 2,673,538 8.48%
Professor Sir Chris T Evans 2,458,111 7.79%
Mount Sinai School of Medicine 1,480,000 4.69%
Barclayshare Nominees Limited 1,306,363 4.14%

I suspect Scottish Widows have reduced considerably , but that begs the questions :
Why no statement that they`ve reduced ? and ,
Who`s taken up their holding ?

So , IF nobody buys the IP , what becomes of it ?

I am VERY suspicious about exactly what IS going on here .
Apart from inept Directors dragging their feet , as others have said ;
there`s a very nasty smell about all this .

[liarspoker] 25/3/2010 12:47

Yep, a buyer should give shareholders a higher return imo but I think that chances are slim. It'd be a nice surprise though. Having said that I'd be happy with 15p cash p/s. :O)

[arc2006] 25/3/2010 12:45

That tells me the company doing due dilegence have walked, but the company is still trying to find funders/a buyer prior to winding up. DYOR

[warwick69] 25/3/2010 12:40

I have e-mailed this question to the company today i feel all shareholders should seek clarification to my points?

This was the announcement re Offer Update dated 10th March
"Neuropharm has been in discussions with a number of parties since it entered an offer period on 3 November 2009 and announced that it was pursuing a proposed sale or merger of the Company. The Company is continuing talks with a
potentially interested party, which is in the advanced stages of due diligence,but no indicative offer has yet been received from that party."

then in the interim results update dated 23rd march you stated

"Following the result of the SOFIA study in February 2009 the Company took steps
to reduce the cash burn to preserve the cash resources by placing research and
development expenditure on hold. The details below summarise the latest position
of our most advanced programmes. The Company continues in discussions with
potential partners for the further development of these programmes but these are at an early stage."

this second comment contradicts the first either you are in advanced talks with a 3rd party doing advanced due dillagence or you are not as the interim report clearly stated talks are in the early stage.

At this late stage with the indication to return capital to shareholders it still appears that the true information is not being relayed to shareholders, which of the above statements is true

[warwick69] 23/3/2010 16:08

so even by above calculations if wound up say end of June £860,000 cash burn plus £600,000 tp pay off directors still leaves cash of 4.7 million so still 15p a share. As Lombiff stated 40-50% upside with little to no downside risk. so why are there so many small sellers at this price? the sooner they offer the cash distribution the better in my opinion. stops MM's making money with this dreadful spread.

[arc2006] 23/3/2010 13:38

I agree with Mike. Directors will be on 12month contracts so their notice period will see them them with a years salary before any actual redundancy package/payment. From memory that's around 5-600k all in(?) Obviously they will have to work up until such time as the company is wound down. I believe there is some possible upside from here as long as the IP goes to someone completely independent for a resonable amount, say enought to cover the wind down costs. DYOR

[mike111d] 23/3/2010 13:34

warwick69, irrespective of performance you can't set aside the terms of their service agreements and all employees including the directors will be entitled to further severance pay based upon their length of service.

[warwick69] 23/3/2010 13:25

mike111d
cash burn is much lower than you state as they only reduced cash by £860,000 in 6 months to dec 09. giving notice to staff will reduce it even further. I also dont see why Directors should recieve the sort of figures your suggesting as they have not done a great job, shareholders should argue against any major payments to any key staff.

[liarspoker] 23/3/2010 12:41

If all GBP6m is on deposit you can be sure that they are receiving interest payment higher than the market rate. That's speaking from experience of a few people I know who have several million in their account.

[boobly] 23/3/2010 12:30

DT :.....Not sure that they would be able to take a fixed term for `The Lot` .
BUT , if they HAD , that might just explain the tedious nature of these protacted `negotiations` .
This lot are a disgrace , I`m looking forward to finding out the TRUTH .

This lot may be going to lose their jobs here (Maybe not, and that`s a real plausible reason for all this NON- Communication) , but I think UNISON or UNITE might be a good place to start looking again .

[mike111d] 23/3/2010 12:21

As I mentioned the other week, you need to factor in the cost of giving notice to the staff and directors which the RNS this morning confirms that they are in the process of doing. The directors will cost no less than £500k to pay off and all told I would expect these costs to be in the region of £1m. Then you have the cash burn for the past 3 months at circa £250k per month. So you can see how this will be eating into the cash balance and this is before you consider professional fees and any other costs associated with winding up the business. All told, I just don't think that the cash premium is going to be as large as some are hoping for.