As IMU’s cash needs increases with its increasing number of trials and products, IMU’s ability to raise funds has diminished as a result of its falling sp and increasing SOI. From nearly $100m raised in Q3 2021, $80m in Q3 2022, to only $53m raised in Q3 2023 (however $65m was the target CR but failed to reach that level of interest).Meaning more and more dilution to come for unfortunate IMU holders. It is fair to say that from the poorly taken up retail SPP in 2023 (SPP target of $30m versus only $18m raised, 60% of SPP target) even though the SPP was well discounted (I took my full SPP allocation and flipped for a profit) the majority of IMU retail is tired of funding the IMU CRs, and IMU will need to be even more generous to institutions on its next placement. Contrast this to the recent RAC retail only bonus options offer, where the $ target was easily reach with 85% of bonus options exercised. Institutions and sophisticated RAC investors were lining up to take any short fall in the RAC bonus options, however management to their credit allowed the 15% shortfall to lapse instead of allowing further dilution after the $target was met. This proves RAC management and board have their shareholders best interest in mind and not just take the easy money to fund their salaries.
Sophisticated shorts seem to some how predict when the next IMU CR is coming, increasing their short bets to over 5% of SOI (8% in 2023) just before the CR announcements. Short bets on IMU is now at a 2024 high of 6%! However, it doesn’t take Nostradamus to predict the timing of the IMU CR’s, as the last 3 CRs were all in Q3 of each calendar year. We only have a few days left of Q3 this year. In addition, from IMU’s own Quarterly report as at 30 June 2024, IMU has only 5 quarters of cash funding left, that makes it only 4 quarters left as at end Sept! 12 months cash run way is usually the RED LINE that companies and investors focus on. IMO, The next IMU CR will not be favorable for retail and increasingly favour to institutional, some of which may be already short the stock in preparation. I argue that the next IMU CR will need to be price under 3c.
I am not saying a CR is imminent, all I am saying is I am staying well away from holding IMU long based on the following charts. I was short IMU just last month, however I took that short off to ulitise my limited capital for compelling ASX biotech longs. If I get my IMU short absolutely perfect, my maximum upside is 100% with infinite downside. However my other ASX Biotech longs have multiple bags of upside.
Some smart readers here will question why I still have a “hold” on my IMU disclosure. That is because I am holding a residual IMU holding to qualify for any SPP that may happen (I hold less than $500 worth of IMU, I would reduce that even more to less than $100 but CommSec doesn’t allow me to hold less than $500 worth of shares).
Just a side note to add to the comparisons between IMU and RAC. RAC (approx $300m) now has a higher enterprise value (EV) than IMU (approx $280m). EV is MC less cash.
(Note: posted on both the IMU and RAC HC threads)
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