Introduction to Hemogenyx

Hemogenyx Pharmaceuticals is a pre-clinical stage bio-pharmaceutical group developing new medicines and treatments to treat blood and autoimmune disease. Despite their small size and valuation they are working with several large global Pharmaceutical companies including Eli Lilly, Johnson & Johnson, Orgenesis and others.

Subsequent posts will highlight the current pipeline of therapeutics which are cutting edge and if successful will save many lives and improve the quality of life for many patients.

Elephant in the room

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.

So what now?

As of today Hemogenyx has a Market Cap of £20mil with 980million shares.

To read the various forums you would be excused for thinking the company is a shell with nothing to offer and just a scam. But when you actually start to dig deeper its clear that big names, seriously big names, the likes of Eli Lilly and J&J are taking this company seriously. Its not a scam, its not “Fake news” the science is real, the achievements are real.

It was trading with an mCap of £50mil last year and since then every pipeline has continued to advance towards clinical proof of concept. They have the addition of CBR which is being called a “Stealth project”. They have up to £10mil cash in the bank to fund the clinical trials. I love a bargain and the deeper you dive the bigger an opportunity this appears to be. Without the impending threat of further Mint conversions or additional dilution in the immediate future this share should do extremely well.

About Love Hemp

I love Love Hemp for a number of reasons, first, I dont have to sell it, the website is top notch, the products are good, they are popular and they are making a profit. Details to follow later but the key points here are:

  • Its listed on Aquis FOR NOW its moving to the Main Market later this year, this will improve liquidity and make it considerably easier to buy.
  • Sponsorship with the UFC has finally started, first posts from UFC bearing Love Hemp begun to circulate this weekend, as time goes on expect this to increase with endorsements.
  • Listing on Amazon is expected this month.

Traders Cafe with Zak Mir: Sunday Roast June 27th

1h 15m 17s Phil on Love Hemp (LIFE)
1h 16m 30s Albert on Love Hemp and market sentiment.
1h 19m 20s Kevin on Love Hemp

I found this worthwhile listening too as it had different prospectives, some I disagree with but still worth listening too. In summary Love Hemp looks massively undervalued and has not reacted to the latest signings as would be expected. Is it because market sentiment has move on from CBD? Or because its not Main Market and liquidity is too low to clear the shares being sold by the broker? One thing for certain #LIFE is performing well as a company, they are selling alot of oil and signing big names, it SHOULD reflect in the share price at some point!

Love Hemp – Dive into Share Price

So its fair to say I am a big fan of Love Hemp, but I am not a lover of the SP, currently sitting at 3.20p, question is WHY is it so low when they are doing so well? Sales are up, beating their own records. Signing of UFC and Anthony Joshua, expected to move to Main Market within weeks and listing on Amazon imminent. So what gives? At 7mil mCap this company could end up a take over target. After recent raises they likely have close to this in the bank and with sales showing no sign of slowing could pay dividends in the next year or two. I have looked at the available data and drawn my own conclusions, this what I think but I could be wrong and nothing here should be considered financial advice.

Reason 1: Aquis Stock Exchange, like it or not liquidity is not as good as the main market or Aim. Many brokers dont offer shares on this market and those that do require a limit order or a telephone order, this is a hindrance but not terminal and we are still seeing serious buying. This would explain some drag on the SP but not the full story.

Reason 2: The Warrants…. As per the Interim Results dated 31st March 2021 there were 103,320,600 Warrants outstanding exerciseable at 1p until 2023. There are additional warrants exercise-able at 5p, unlikely to be converted until at least 5.5-6p but more likely as we have seen with the 1p warrants 2-3x face value so 10-15p. To date we have seen 2 notices of exercise, here on 14th April and here on the 17th May, for a total of 44,914,285 million shares. Despite vesting in early Feb 2021 the daily volume at Love Hemp was tiny and only from the 15th Feb did volume start to explode with a spike to 8p, its likely this is when the warrant holders began to sell down. In 2 months to 14th April it appears 10mil shares were sold and then exercised, but then in the space of a month a further 35mil shares exercised and sold. This escalation is good news for existing shareholders, the sooner the warrants are gone the better. Provided this pace of selling has continued or even increased then its likely since 17th May, 29 trading days, with average daily volume of about 3mil that another 30-40 million shares could have been forward sold.

So What? Well assuming I am correct, this is a big assumption, then from the 103mil 1p warrants its likely that only about 20mil warrants are outstanding. As we approach the end of these warrants interest will perk up as people who were waiting for the end realise now is a good time to jump in. We are also approaching Main Market listing time, when this happens the increased liquidity will help churn any warrants in no time.

I hold a small number of shares in Love Hemp and only cover shares that I am invested in and plan to hold for the medium to long term. I believe this share is massively undervalued however the reasons for this are understood, temporary and unlikely to have any material negative impact to the company which makes it a strong hold for me. Do your own research before trading, this should not be taken as financial advice or a recommendation.

#LIFE #LOVEHEMP @lovehempuk @lovehempgroup

Hemogenyx Investor Presentation

A new presentation is available here dated 2nd July 2021.

Looks like the company is starting to answer investor calls for better Investor engagement, the presentation itself should also perk the ears of the pharma community. Some key takeaways:

  • Explicitly names some massive names as collaborators including Ely Lilly, Janssen Pharmaceuticals, Orgenesis, Penn, Center for Cellular Immunotherapies and Global Co.
  • 6 Products in the pipeline compared with 2 previously despite the mCap substantially lower.
  • De-risked due to humanised animal studies and expect to be ready for clinical trials upon completion of IND studies.
  • Cash on hand, all indications they will be into clinical trials before any additional funding is required, and as previously stated the intention is to partner or licence products once clinical proof is achieved.

As far as small cap pharma goes Hemogenyx is the one with the biggest potential, the board of advisers and scientists are world leading and the products they are developing whilst life saving are also potentially worth billions. Due to their humanised mice models its expected that most if not all products will perform well in clinical trials which are due to begin soon. Its often the case that a small company like this would be unlisted and available only to angel investors, those that are listed would expect to be worth 100-200mil mCap. Its the unfortunate series of events that have led the company to today’s damaged SP which is bad news for the company if they ever wish to raise capital in the future but an absolute gift for investors who happen to come across the opportunity.

This should not be considered financial advice and the author is a shareholder in this company.

Half-year Report

Have not updated for a while but off the back of the Half Year report an update was due. The report was significant and gives a good insight into the operations of Hemogenyx, I have extracted what I believe to be some key points:

Finances

The report goes into detail about the CLN facility which caused a technical crash of the SP, it also makes clear the facility and attached risk is now gone. The company holds approx £10m cash at hand with an approximate burn down of £3m per year and have confirmed they believe they have enough capital for at least 12 months.

CDX Antibodies

Detailed negotiations are ongoing with GlobalCo as to the exact terms of the licencing and Global Co’s involvement in progressing CDX towards clinical trials. The report makes a point to highlight work with Global Co continued at pace AFTER the initial development work completed. What is significant is that both parties are currently working “naked” as the existing development contract has expired, either side could walk away leaving the other high and dry having wasted considerable time and money. This co-operation and continuation of effort whilst negotiations take place is a demonstration of both sides commitment to get the deal done and a very positive indication.

HEMO-CAR-T

This is a significant update: “the Company has engaged a contract development and manufacturing organisation that will manufacture DNA plasmids and viral vectors for the production of HEMO-CAR-T for clinical trials.” There are 3 manufacturers required, what is outstanding is an organisation to produce the CAR if my understanding is correct. This is a necessary step in taking CAR-T to clinical trials and a strong and positive indicator of progress. Is it likely Hemogenyx would have secured 2 of the 3 suppliers to produce HEMO-CAR-T if they were not imminently prepared to file IND application and begin clinical trials?

The half year report also goes to pains to call out the significance that despite this advanced stage of HEMO-CAR-T and the Master Translational Research Services Agreement with the University of Penn the company retains 100% of the IP associated with this product. As highlighted elsewhere on this site CAR-T is an explosive and valuable sector worth billions, proof of clinical concept of HEMO-CAR-T would be game changing to the company.

CBR

The company has acknowledged a failure to update the market regularly and committed to update more as time progresses. This is due to a gradual consistent development rather than specific key milestones, however taken as a whole CBR has hit key milestones. First they have identified 2 key product candidates although more available, one for Covid-19 and one for an undisclosed type of cancer. In Vitro experiments have been successful and testing continues. Given the ability of Covid-19 to beat vaccines and mutate it is possible CBR may actually have a role at some point in the future. Early days but certainly a promising pipeline to watch.

Autoimmune Diseases

As reported in June 2020, the Company entered into an agreement with Eli Lilly and Company (“Lilly”) …. In recent months this work has significantly accelerated. Lilly and the Company are now progressing with the initial selection of potential drug candidates. This is a significant progression from our last update where we knew nothing, the next stages after selection of candidates will either be further testing or licencing, either indicates strong progress.

Patents

The unique properties of the patented monoclonal antibodies were the primary driver in bringing GlobalCo to enter into an agreement to develop CDX. The Company has made further patent applications in relation both to HEMO-CAR-T and to the CDX bi-specific antibodies, the latter entailing a joint application with GlobalCo. – The patents secured by hemogenyx provide key connectors to bind to multiple cells in the body including cancer cells and Bone Marrow stem cells. With a limited number of targets and patents granted the patents granted give Hemogenyx a massive presence in the Bone Marrow Transplant market and AML treatments. I will do a more detailed article on the Patents and the significance when time permits, suffice to say in my opinion they are worth as they stand many multiples of the current companies mCap even without CDX or CAR-T.

Growth

The company has taken on more staff, more scientists and are moving to a new larger premises in the near future, all key signs of growth.

Summary

As a shareholder in this company having read all previous updates I read the recent Half Year report with the expectation of nothing new. I expected no surprises or NEW information, I was plesently surprised. The Report does several things, it reassures us that the company is financially secure and well funded, dilution is unlikely and risk is mitigated, in terms of value the Patents secured + assets easily underpin the mCap. There are 4 key active pipelines, Lupus is the big surprise appearing to be close to a key milestone of selecting a candidate for progression. CAR-T is also primed for clinical trials requiring only IND application and CAR manufacturer, CBR is progressing nicely and will hopefully update soon. CDX is the primary focus of all investors however and whats clear is both Hemogenyx and Global Co are operating as if the licencing agreement is a done deal. The failure to halt progress pending a successful agreement shows both parties are committed to getting it done. At an mCap of 19mil the upside here is massive, there is always risk and the report highlights these risks.

None of this article should be taken as investment advice, do your own research, what is presented here is MY opinion only with no guarantee of accuracy. Please read the official RNS which can be found HERE.

CDX Licence Agreement

Hemogenyx Pharmaceuticals #HEMO, announces that it has signed a licence agreement (the “Agreement”) with Eli Lilly and Company (“Lilly”). Under this Agreement, Lilly grants the Company an exclusive worldwide licence to certain intellectual property developed by Lilly (“IP”) related to a CDX bispecific antibody for all uses, including the treatment of acute myeloid leukemia (“AML”) and other blood cancers.

A lead CDX antibody candidate has been successfully created and the Company is initiating investigational new drug (“IND”)-enabling studies that include manufacturing of the antibody for animal toxicology studies and subsequent clinical trials. The work done to date fully validates the Company’s original expectations and shows wider potential applications for CDX than originally envisaged. It is now being developed for conditioning for bone marrow transplantation and also for the treatment of several blood cancers, as further described below in the section headed ‘About CDX’ below.

Confirmation at long last that Global Co is Eli Lilly, confirmation that CDX works against a whole range of targets and not just AML. With a small upfront payment but Eli expecting substantial royalties and payments down the line instead just demonstrates they know what Hemo have is worth the big bucks. In my opinion today’s announcement unlocks Hemogenyx from the bureaucracy of big business so they can get to clinical trials faster but its clear Eli Lilly are behind this project. Zero risk for Eli at this point with the ability to just buy Hemo when CDX is proven in clinical trials.