Renovo Share Discussion Threads

[grahamg8] 26/5/2011 07:50

Current cumulative tax loss approx £56m at a Corporation Tax rate of 20% would be worth £11.2M to a profitable buyer. If spread out over several years we would realistically be looking at around £5m when discounted. Probably the biggest 'asset' after the cash.

[holly_dog] 26/5/2011 07:37

Yep,still underlines a case of c.£40m after control premium and very low value of ip..I was off by about a mil in my assumption (44 - 3 cash burn - 5 winding down). They've done well in cash all considered

Should be decent open in fact pushing onto at least 17p (33m)

Confirm call prob worth listening to there are usually a few nuggets.

Shame they weren't able to say 'we would conservatively estimate ip is worth xm, would at least give a ballpark of what they think they could get

[cumnor] 26/5/2011 07:25

Exactly as i expected. Cash of 33ml (more than i thought as it is another month) and running costs down to zilch. Ip could easily be worth several million on top and value of listing to ? Predator on top. Once winding up done expect complete strategy change, maybe to or shift to commodity assets given sharp sell off over summer which really makes the listing of any cash rich company all the more attractive. Plans already in place with large holders and would'nt surprise if buyers for ip lined up but need to do the necessary first. Imo

[holly_dog] 26/5/2011 07:20

Well that's that. Total of 33m after consultation, and pushing both adaprev and Prevascar but potentially update on strategy after consultation period.

Should be flatish open I guess

[cumnor] 25/5/2011 16:50

Holly, Agree, I do not expect fireworks tommorrow but just usual reiteration of what we know and perhaps cash of 30ml plus. The widing process and notice period is not fully over yet so i do not expect mgt to make strategic announcements till this is over. I am sure they have serious plans in place which will see a return for investors/mgmt and expect those within a month. (much more impact on share price also when out of the blue) but with insiders and aggresive funds holding loads i have no doubt we will be very pleasantly surprised soon, if not tomorrow. Imo

[holly_dog] 25/5/2011 11:47

Just to question my own logic - what are the odds of nothing material being announced tomorrow e.g. no decision on direction of business, whether it be acquisition or (unlikely IMO) new funding to continue trials

I have assumed that given mgt are so tied up in the shares, and two new shareholders have come on scene, they will be pushing for a conclusion as every day means more cash burn and less for all shareholders

[smith99] 25/5/2011 01:20

The thing is, we've all seen the photo's and can see improvements, just didnt cut the mustard. The really sad thing is that if I had a scar due to accident and someone suggested that this may work in 5% of cases, I would probably pay for it and give it a try. People desperately try clingfilm and all crazy notions to prevent scarring. Not that I am suggesting you should sell it like that but it does just go to show how massive this market potentially was. Real Shame

[alimo] 25/5/2011 00:07

If all the IP is only worth your guess of £4m, why have a 'fire' sale now? We have £40m+ that we can press on with, bringing other IP to saleable products.

There are other smaller companies that have the balls to press on with their research, and hopefully we are blessed with with a Board that has the guts to do likewise, and large shareholders that know much more than us, that agree.

[smith99] 24/5/2011 23:03

I wonder whether this research would be passed onto a university or something like that ? I guess a lot of answers are coming real soon now.

[hollerich1] 24/5/2011 20:47

what professors prides themselves in is their resarch credibilty, believe me this professor will have been unable to sleep since the announcement of the failure and would have been trying to find out why this fails and how it could work.

[caradog] 24/5/2011 17:51

Clinical trials are just that - a test to see whether a drug works for that defined end point. If a drug misses its end point, it doesn't work, by definition. I do recall the prof expressing shock at the results, implying that this was not a statistical near-miss.

I realise you have, wisely, discounted any residual value in Juvista, but others seem to suggest that as the phase 2 results were promising, there must be value there somewhere. I am merely pointing out that the phase 2 results mean nothing, now that the drug has failed phase 3.

[holly_dog] 24/5/2011 17:06

Lol!

Added more before close..one day left before should get some material news one way or another. Been in and out of Renovo for 5 years now, hope it goes out with a bang and not a whimper

[caradog] 24/5/2011 16:10

You may be right. Residual value is hard to judge from the outside, not knowing what the insiders have got planned. I suspect what happens next is up to the financiers rather than the physicians. But I hope your poke has a nice fat pig in it!

[holly_dog] 24/5/2011 14:37

We're talking at crossed purposes. I am saying the same thing - it doesn't work in a normal population.

But I still believe the entire portfolio contains some low value which a pharma company could acquire incl all patents etc for £3.5m - £4m.

My investment thesis is that this is worth more than current levels, hence I buy. What do I have to believe for it to be true?
- Cash will be run down to c.£41m from £44m in March
- This represents an attractive reverse take-over target for a private company looking to list, and the control premium they are willing to pay will somewhat offset the winding down costs of c.£5m (assume -£3m). I assume lowish winding down costs because they did a big cull after phase 2 failures and have trimmed a lot of staff already
- IP is worth £3.5m

Gets you to c.£41.5m vs current market cap of £28.5m - implying decent upside if they announce on Thurs an approach. If someone is willing to pay more for IP then even better, but even assuming none it implies good risk reward vs current levels

[caradog] 24/5/2011 13:54

Nope. If a drug is to benefit the normal patient population, it has to work in a phase 3 trial, and the phase 3 trial showed it doesn't work by accepted methodology. The phase 2 trial is only used to select drug candidates for phase 3. Once phase 3 is under way, phase 2 results are irrelevant and of no use whatsoever in gaining marketing approval.

About 30% of drug candidates fail at phase 3 having gone through phase 2 so Juvista's fate is not unusual. The knowledge gained in the process of developing Juvista may be of some worth, but I don't see any other biotech paying much for it, given the phase 3 failure.

[holly_dog] 24/5/2011 13:03

Cara not quite true. It depends on the end-points and the population. It just didn't work well enough once the trial restrictions were open up and it was really put through it's paces. It did work in a highly controlled environment but that wouldn't be enough for EU approval.

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From RNS
In light of these findings the Company regrettably concludes that the efficacy of Juvista is insufficient to demonstrate significant benefit when tested in a broad population of scar revision patients.

The findings are surprising in view of the results of the Phase I and II trials of Juvista, which, as is typical, were conducted in more restricted, controlled populations.

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It must do something as then none of the P2 trials would have worked, it just doesn't do enough vs placebo when the controlled restrictions are removed.

[holly_dog] 24/5/2011 12:58

Yep exactly. If you step back, these guys have spent 20 years looking at this and Prof Ferguson has a bloody impressive CV ( you can't imagine they have not found anything of value in 20 years, and with more work and some of the newer candidates coming through they could be really close to cracking it (RN1005 springs to mind). But sadly for them because of Juvista failure someone will probably get a ton of IP on the cheap and could end up making it a short time later.

[caradog] 24/5/2011 12:55

You misunderstand the nature of clinical trials . The drug does not work, and I think if you read Prof Ferguson's comments, you'll understand that it missed its end points by a country mile. The chances of a bigger trial showing a statistically significant benefit is therefore very small and is likely to prove an expensive and fruitless exercise. Phase 2 is forgotten, phase 3 failed. Finito. Kaputt.