Its worth addressing the elephant in the room, the Share Price and mCap, at time of writing the share price was 2.075p with an mCap of just £20m. Subsequent posts will hopefully clarify what I believe the company is worth however, its relevant to explain how we got to the current price.
18th November 2020 – Hemogenyx announced Financing Facility of upto £60million with an initial tranche of £12million to be drawn down on 11th February 2021 announced on 3rd February 2021. The structure of this loan was such that the issuer of the loan, Mint Capital, was issued Convertible Loan Notes which could at any point after the loan was drawn be converted into shares in Hemogenyx. The terms were such that on conversion of the CLNs into shares the price used to decide how many shares issued would be the lower of the closing bid price for the previous 3 trading sessions minus 10% discount. This in essence guaranteed that Mint would be able to forward sell any number of shares up to 30% of the company and be assured that at any point they could convert CLNs for a price they were able to accurately predict.
As a loan facility the ability to access £60million gave Hemogenyx the ability to approach global pharma and negotiate with a strong financial position. Had the market reacted positively to this facility and rewarded Hemogenyx with a strong Share Price then the CLN facility would have been a welcome cash injection with minimal dilution. This was not the case and what came next was an overall negative reaction with the SP falling steadily and investors either turning away from Hemogenyx or becoming bearish and either taking the opportunity to trade down, de-ramping and short selling the company. Once the CLN conversions begun Mint started steadily and slowly converting and selling shares, but always taking advantage of any spikes and locking in lower prices with each conversion.
Whilst this was going on sentiment was strong that Global Co who have been working with Hemogenyx for several years on their CDX candidate (details to follow) would buy the CDX antibody from Hemogenyx for a substantial upfront cash payment late 2020 or early 2021. As such many investors had become laser focused on this key event as being the reason for continued investment, the turning point in the company and the point at which the Mint CLNs would be terminated. However on 14th April 2021 the CDX Option Update announced that Global Co did not wish to licence the CDX IP from Hemogenyx at that point. This RNS failed miserably to convey that Global Co would continue to work with Hemogenyx through clinical trials and were still likely to take CDX once it was proven. As a result of this perfect storm of disappointed investors plus the CLNs the share price collapsed pre-open.
From this point Mint Capital began dumping of shares with haste keen to exit the lending facility as quickly as possible with little regard for the damage done to the company. The resulting chaos proceeded until 18th May 2021 when Hemogenyx were able to negotiate with Mint Capital to repay and cancel the outstanding CLN facility in full. This was not without further pain as although £1.6million worth of CLNs were repaid in cash and cancelled with immediate effect £6.5million worth of CLNs were sold to placees arranged by Peterhouse Capital and immediately converted to shares in Hemogenyx at an issue price of 1.5p resulting in an additional 433million shares.
Within the first few days of the CLN cancellation it became apparent that many of the placees had taken advantage of the significant discount and flipped immediately. All these events have led to a situation where in a very short space of time the market has had to absorb millions of shares at ever falling share prices with long term investors constantly taking the brunt of any pain. The good news is the pain is over, CLNs are gone, the arrangement with Mint has been terminated and as subsequent posts will highlight the future is looking bright for Hemogenyx investors.