CEO Update - 17 December 2014
Some Thoughts on Today's Private Capital Raising
Dear Shareholders
Last Monday I was sitting on $3M in cash and a share price of 8.4 cents. The cash meant that the Company was viable and could run a basic R&D program for 12 months. But it didn’t get any of our pipeline of 4 drugs into the clinic.
Moving even one drug into the clinic, generating what we are confident will be exciting data, and turning the company into a clinical stage company, is my focus. It is what we need to do to bring the rewards that shareholders are anticipating.
We were working our way through a range of fund-raising options on the table, comparing cost of money and dilutive effect. But they all had a common theme though – that the current market globally was very tough, particularly for biotech. IT is back in vogue and pushing healthcare stocks to one side.
My view has always been that good stories and great opportunities will always get funded despite the conditions. Nevertheless, you still have to get out there and raise the funds, obviously with no guarantee of success. And in this tough environment, a company with a tiny market cap and not yet in the clinic and developing drugs with no mainstream buzz about them, is a challenge.
I have scheduled 6 investor conferences in the UK and US over the next 5 months, as well as attendances at major scientific conference where some Novogen data is being presented. That was all part of the strategy of exposing the Novogen story as a way of underpinning a capital-raising.
That was Monday.
On Tuesday we made an announcement that I saw as bearing exciting news, but with no great expectation of a market response. Nevertheless, it generated a response, with almost twice the Company’s share capital trading on NASDAQ in the one day. That’s quite a response.
Wednesday morning I woke up to the news that that response had flushed out a number of big US funds who invest in biotech. The offer of an investment was made on certain terms and it came with the proviso that the deal was done today.
The Board accepted the terms on the basis that the certainty of $4-plus million at what could only be described as generous terms was better than the uncertainty of trying to extract better terms over time when there would be no certainty of the share price over the coming months.
I take a medium-term view of the world. We have what I firmly believe is the most valuable drug development IP in the world. Proving that value by getting it into the clinic is, in my view, the best thing that I can do for shareholders. Short-term pain or gain is important, and I understand that that is how the market functions. But unless I can show that any one of our drugs is capable of changing the face of chemotherapy, then I am selling the Company short.
The funds we now have will allow us to bring Cantrixil into the clinic and to get Trilexium ready for the clinic. From a standing start just 2 years ago, that’s a fairly remarkable achievement by any standards.
Graham Kelly
Posted on December 17, 2014 by Novogen.
www.novogen.com/ceo-postings/2014/12/17/ceo-update-17-december-2014
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