capital raising or charity fund raising?

Having the main act of the CR complete I can compare this CR to a Charity Fund Raising :(

I stated several times the company needs funds and nothing wrong to do a CR, I was foreseeing the CR since February, but I did not expect it to be run and done in such a poor manner for a company which is in a very strong financial position (for a small cap), with strong fundamentals and experienced board and mgmt team.

During the whole campaign it looked the company was expecting all mum and dad investors would run to the bank to chip in just because it’s for a good cause to fight against the cancer and I believed to the end they have a trump-card to play to support the run to the bank.

I don’t know who and what analysis and due diligence they did in regards to the CR expectations but it can’t be real:

1. In the last 12-18 months fund raising totals for the small cap stocks are very low and mostly unsuccessful. Don’t be fooled by the stock markets record highs in the last 6 months – “thanks” to money printing flowing money to the dividend paying stocks. That money flow got nothing to do with mums and dads.

2. Since the last successful and oversubscribed CR 2 years ago the sp tanked ~60%, since the announcement of the CR the sp tanked another ~30%, once the new shares flow to the market the sp will factor further ~10-15% damage. All in all is a massive ~75% torpedo to the shareholder value. You don’t need to be a whiz to work out mum and dads are better off keeping the cash against the loan.

3. Further to the damage is the handling of the sp price offer: announced at 10c, few days later change to future 2 weeks average. Why not straight to the last 2 weeks and full stop?

And now they are surprised and disappointed banking only 35% of the expected 15mil pot? :o)
I’d say 6mil from the shareholders is a very good result in the current situation.

Another odd situation is the offer to the “big boys” – extend the offer for another 3 months, another 3 months of uncertainty and guesses for the shareholders.

With the current and projected expenses + the result of the CR, the CR question will pop up again mid next year or even earlier.

May is a cancer awareness month with the cancer council running donations and fund raising activities. It looked to me Prima hoped to join the theme with piggy buckets on the corners, bike runs and morning teas with stories where most people donate just for a good cause to fight the cancer. Then they do a raffle (options) where you can win or not, but everything to go for a good cause.

If one hopes for a game changing announcement re. PII for other 3 cancers – I don’t want to be a pessimist – but I’d not bet on this, why:

1. The three new to be announced indications are a “secret of Polichinelle” announcement. Most people already know what they could be or very likely to be and the smart money know the prospects for each. Consider it’s factored in.

2. The efficiency of CVac is an open question atm. All we can tell for now is CVac is safe and with low possible side affects for the patients in the new indications. Once the November results are out there will be more clarity in regards to other cancers as well.

With all the grants and tax refunds I still thought the CR was coming, but I expected it to be of a “light” damage: options at a price of 2-5c with the heads at about 15-20c. This way the company could raise the “required” matching funds for the new trials and significant funds later via the conversion if the November results are proved real positive. (However the “if” clause is a weak chain and the November results are in question atm)

What’s done is done, nothing I can change, just speak it out :)

PS1: I did my small part in organising and donating to the biggest morning tea this morning and it feels better than my investment in PRR.

PS2: As a side story, MR is a non-executive director with another small-cap medical company, earlier this year their sp surprisingly ran up from 2c to 5c, they did a successful CR at 4c in March, back to normal business now around 3c - hand of a master ;)