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PP investors are weak
If you're taking on venture risk in what should be a high quality story that's not even started to play out, you shouldn't be selling here. Very disappointing.
I partly blame management as the IR effort has been poor. I hope this is a wake up call and I have a feeling the CRx guys will be more aggressive educating the investor base. The former Intiva guys have been way too lax.
There's no requirement that they have to issue an 8-K for that
But go ahead and spew nonsense.
Let it go
That's a non-story. Tesla was making misleading statements that were proved to be false. It wasn't the fact they used Twitter, it was the nature of the statements.
A simple search reveals the following:
"The Securities and Exchange Commission today issued a report that makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information"
So Twitter is a perfectly valid means of distributing information since it's open to all investors and does not constitute selective dissemination.
Valuation
Food distributors typically trade at 1-2x sales, but their growth rates are typically GDP +-2%. Also, their margins are lower than what VRUS should be particularly with VRUS' mix of branded products, which most distributors don't have.
On the low end, at 1x just the $20mm in revenue that has been guided to, VRUS should trade at $0.013-$0.015. When a financing package is announced, hopefully a large portion of the backlog will be realized. At that point, the stock can go to multi-pennies.
The Friday update was enticing, but the huge catalyst is the announcement of a financing package to realize the backlog and really prime the pump.
That said, we've seen the lows and it's time to re-rate higher IMO.
Appreciate your perspective
Thanks for the insight.
Stupid sellers is right
I can't definitively say that it's the PP holders selling, but that's a reasonable conclusion. If so, it's disappointing that they are price indiscriminate. Their cost basis may be low, but they're leaving a LOT on the table.
Conclusion was based on pre-CRx
I have to imagine Alex is very aggressive and he's certainly motivated to boost the stock price for a number of reasons. Lots of reasons to be optimistic, but not much is reflected in the current valuation.
Management
Surprisingly, this management team has been poor at IR. I would have expected better given Alain's involvement, but let's hope the CSE listing unleashes additional communication.
Price suppression
Could be happening to allow for institutions to accumulate before CSE listing. Just saying it's a possibility.
Shareholder base is churning
As Feller has suggested, the PP holders are the most likely sellers given and the stock is absorbing the selling pressure well. At some point, hopefully soon, the PP selling pressure will abate. The CSE listing should be the next impactful catalyst IMO.
XactDose
It would be nice to get updates on licensing and commercialization opportunities for that solution. That seemed like the most promising near term opportunity from a revenue generating perspective.
If anyone has thoughts or incremental information on that, please share.
If Volume precedes price...
As the old adage goes, this stock is setting up nicely.
Your message encapsulates the frustration
I know Mark reads this board, so hopefully he relays your concerns.
I understand your frustration
And I share your viewpoint to a large degree, particularly as someone that has supported this company since Feb 2017.
That said, the price decline has been driven by very low volume. The float is north of 1.4 bn and the stock is trading less than 20mm shares a day...on some days much less than that. I wouldn't read too much into the price decline. I think the float is getting locked down, but the stock needs a catalyst.
The market is waiting on Anshu to deliver on a financing package. He's been slow on that front with lots of promises, but no results. I think Mark has exacerbated the problem, to some extent, by setting expectations that haven't been met. I don't think that's entirely his fault as I'm sure he's just relaying Anshu's comments. Ultimately, Anshu needs to step up. We're all waiting.
I agree with that
Posting youtube videos would make a mockery of the business and is silly. That said, a conference call is necessary and has been promised for some time.
No
It's a transference from the impatient to the patient.
Not an expert
But the regulatory pathway for CBD-based drugs is evolving. Comparing it to other pathways will likely be misleading. For example, there should be no safety issues associated with CBD, so the trials should mostly come down to efficacy and statistical significance.
If there is a significant unmet need, the FDA can expedite the approval process. The European agency tends to be more open to novel drugs, so it's possible Nexien pursues European approval first, particularly given Dr. Schloser's standing in the European medical community.
Also, keep in mind that Nexien intends to raise capital at the project level to fund development. This is to mitigate risk and allow for the drugs to be more easily sold to other companies. They seem acutely aware of the cost and risk of commercializing drugs and would rather focus on R&D and perhaps get a royalty on eventual sales. Alain understands corporate finance and to this point, has done everything he can to minimize dilution.
I'm hoping we get an update on XactDose soon. That could propel the stock even higher given the near-term revenue potential.
Well Said
I can't add much more to what you've communicated, other than some of the specific refinancing options.
If he can get a revolver to realize the entire backlog in a year, that would be a grand slam. I estimate that it would take a $20mm working capital facility to accomplish that, but as you said, perhaps it's best to hit a single or double to get things moving in the right direction.
Thanks for sharing
I don't agree with much that was said. Anshu hasn't had a conference call for over a year, so that's effectively how long the quiet period has lasted. It hasn't helped the stock. The notion that the quiet period has only been a recent phenomenon is a fallacy.
He's talked about a financing package for several months and there's been no details released. Anshu needs to step up on the corporate finance front, which he's failed at to this point. His business development skills are impressive and I have little doubt that he has a lot of connections in the GCC, but he's been miserable in terms of managing the capital structure. I know there were mitigating circumstances, but he can't keep making excuses.
Mark has told me to be patient since this time last year. I have been and will continue to hold because the stock is absurdly cheap just on the $20mm in realizable revenue, but I'm a little tired of their whining. They have to deliver on key milestones and reward their shareholders.
I have given them numerous suggestions on options to address the share count and recapitalize the company in a shareholder friendly manner. I hope they follow at least some of my suggestions.
Any updates from Mark?
Someone on this board must have contacted him today. Please share.
CSE should open up the stock to mutual funds and ETFs
There's a number of marijuana focused investment funds that would be able to buy the stock. I'd have to imagine this management team would be appealing to those funds.
That's highly motivated to raise capital...
and minimize dilution given their ownership. I think they're waiting for the CSE listing so they can get some institutional ownership.
Keep in mind
If Anshu really is in M&A discussions, he's not going to communicate much. That also may be why he was gone for a while, presumably to the GCC countries (but perhaps elsewhere, IDK).
Moreover, the company usually goes into a quiet period at end of quarter (typically in the last month through the earnings release). That doesn't preclude the company from pre-announcing results, but usually that won't happen until a few weeks after quarter end.
With a capable CFO in place, at least on an interim basis, and no Nestbuilder results to consolidate, it may be possible to provide preliminary revenue numbers soon. Let's hope.
Totally agree
The effect you mentioned dominates price movements on a day to day basis in the absence of substantial news events that affect the fundamentals. This is particularly noticeable in OTC land where there is minimal institutional investor participation.
On the positive side, when the catalysts like a financing package and recapitalization hit, the upside move will be significant.
I made that point to Mark
Told him that was a huge missed opportunity. He basically acknowledged that it was a mistake not to tweet or PR the name and symbol change. Not sure what they were thinking.
What we need now to properly re-rate the stock is an announcement on a financing package to realize the backlog (and hopefully grow it). Let's hope it comes soon.
I have been encouraged that any weakness in the stock has been accompanied by low volume. So it's mostly retail churning (IMO), which unfortunately results in opens like yesterday.
You may want to revisit the definition of float
I discussed this in a prior post. Lots of misconceptions on this board.
It's not CRx
They have restricted shares that haven't been registered. It's probably private placement holders as Feller suggested.
It means that 1.1mm shares
Are not subject to earnout. That doesn't mean they can be sold immediately, they'll have to be registered first.
Keep in mind
The 1.1mm shares being issued at closing are still not in the float. They're restricted shares that aren't freely tradable. I assume they'll be subject to a 6 month lockup, but I haven't seen the exact terms as of yet. Regardless, I don't think there's a high risk of those shares hitting the market anytime soon.
I don't think they'll cash in
Sends a terrible signal to the markets. They also have an incentive to see the valuation go a lot higher so they can raise enough cash to start paying salaries. My guess is once they get the CSE listing, they'll hit the road and start to drum up institutional investor interest from at least a few parties.
Diluting themselves at this price would be a bad move on their part as their compensation, at this point, is entirely tied to the stock. Alain and the Board were smart in structuring the deal that way particularly with the earnout provision to align interests of all stakeholders.
Hope the CRx guys
Understand how to educate investors and build some enthusiasm around the stock. The Intiva team sure has failed on that front..."refer to filings" isn't enough.
Let's hope for the CSE listing soon.
It was probably a trading position
Around the spin-off. I wouldn't draw conclusions based on their exit. They owned a very small position too, so it's not a big signal either way.
As the market cap increases, micro cap funds will take notice. It probably needs to be at least $50mm to draw meaningful institutional investor interest as most funds don't want to cross the 5% threshold.
I'd agree with that
Definitely on the young side. I suspect that while he won't be called interim CEO, they'll look to bring on a more experienced CEO after a capital raise.
I think given the company's stage of development, it was probably hard to convince an exec from a more established company to take the job. Once a few milestones are hit, it will become easier.
Deal
I like the way they structured the deal with a modest amount of restricted stock up front and the remainder vesting over three years. Smart move on Nexien's part.
Seems like a modest price to pay to acquire three patents and build out the team with more experience in CBD. Hopefully the market likes the new CEO. I am pleased that Alain will stay as Chairman to oversee things and remain Chief Strategy Officer. Everyone on the team should be motivated to boost the stock price so they can raise additional capital. I guess I understand now why they've been tight-lipped and had infrequent communications with investors.
Hopefully we'll get more news on the FDA pathway. Perhaps this acquisition was done to augment the team in anticipation of a ramp up of research activity.
Anyone else have thoughts?
Thanks for the update to the company page
Much appreciated. I think the lack of Twitter activity illustrates a point that I have repeatedly raised- the company needs to step up its investor education effort.
One can hope that they're waiting for the CSE listing to release a comprehensive review of strategy and activities. That would make some sense in terms of attracting institutional investor interest. Other than that, I struggle to find a reason that we're not getting more frequent updates.
I disagree to a certain extent
I suggested to Mark that the company put out a substantive update. There was lots of material in the 10-K that could have benefited from further explanation. The last meaningful update that they provided was in the Spring. Much has happened since then but the PRs have only been for one-off events like the CSE listing and the recruitment of an advisor. Not saying those aren't important, but if they're going to realize an appropriate valuation, ie. one commensurate with the growth potential and market opportunity, they need to discuss more.
This is a growth company that will need additional capital. They need to discuss and sell a vision of where the company will be in the next 5-10 years. They have done very little to paint that vision in PRs.
No one is asking them to fabricate information. Just provide additional color on what's already been provided in the 10-K and other filings.
Insider shares
We need to distinguish between registered shares and float. Insider shares are typically excluded from the float as they aren't freely tradable except in certain windows after quarters end. Even then, I don't see this management team and the board of directors selling shares anytime soon given the paltry valuation. They're in it for the long haul. So the "effective" float should remain quite low for a long time.
The market needs a substantive update from the company. I was disappointed that they didn't put out a corporate update after the 10-K as there was a lot of interesting information that could have benefited from further explanation. That was a missed opportunity.
My guess is that the company is waiting for the CSE listing to provide a thorough update on its activities and plans for 2019. Hopefully that will boost the stock and get some of the Canadian cannabis funds and ETFs to take positions. That's the strategy I would pursue given my prior corporate finance and investment experience. I'm guessing Alain Bankier is thinking along similar lines given his extensive experience in the public markets.
Not much Mark can do
Has to wait for Anshu to finalize news dissemination.
He should have put out a PR for the symbol change, so I do fault him for that. That said, he was apparently led to believe that there was additional information to release and he wanted to combine it into a more substantive PR.
So we wait...patience will be rewarded.
Could become the next IG#C
Sector needs a new leader.
MKR
I sent Mark an email asking why there wasn't a PR (or at least a Tweet from Anshu) for the symbol and name change. He normally responds quickly, but I still haven't received a response after a day.
I believe they are working to announce something bigger when the next PR comes out. They know announcing a financing package is critical to raise the valuation. Let's hope that's the next major step.