For any agency theorists, today’s Weekend Australian discusses CDY ($26mln MCap) and its new #1 shareholder.
He has been quoted “If you are going to work with a company you ought to have shares in it”. A key takeaway being “work with”.
Note: Since buying in at market, he has since accepted a role as a director (The company now has serious credentials across the board)
After amassing a reported 200mln AUD net worth turning companies around, when questioned on his investment decision he is quoted “the way that I thought about this is what is the next way a person can make a meaningful amount of money”.
Considering he owns circa $1mln AUD in CDY, and he is worth $200mln, it could be assumed “a meaningful amount of money” is referring to more than a few bags.
The organic growth is very solid and alone indicates a fundamental inflection point. My take is current revenue projections will be dwarfed by sales into global expansion into US, China and other regions with a new established and market proven range of products.
Some borrowed commentary on Monday's quarterly:
The most striking feature of the March’18 quarterly charts is the much-touted jump in Advangen cash receipts for the quarter (blue). That $2.2M figure is only a little less than the total cash received in the previous quarter, which had included a contribution of $1.06M from research grants and royalties. Indications are that the current quarter also will be impressive, although much of the cash received from the planned June QVC Japan sales event is likely to be collected in July.
Cash outflows were not much lower than the previous quarter, to a large extent a result of a higher than projected admin/corporate expense and an unusual amount falling under the ‘Interest and other costs of finance’ category. Costs nonetheless were well higher than previously projected, so the $1,930K anticipated for the current quarter also may be conservative. The R&D projected estimate seems low compared with historical figures. The high admin/corporate figure experienced possibly reflects expenses associated with organising the 5th Midkine Symposium.
Cash in the bank at $3.4M was stable quarter-on-quarter and remains well above the historical level of around $1.5M that has preceded a capital raise. Even if quarterly cash burn were to remain around $700K, and research grants and CxBladder royalties ignored, there still would be sufficient cash to cover operations for more than a year.
Finally, with the receipts-to-expenses ratio remaining fairly stable the projection of trends in the continuing cashflows was little changed from three months ago, and the most likely timing of achieving a cash neutral position remains as the first quarter of CY2019. Again this is based on cash receipts from the Advangen business alone and doesn't allow for Midkine income or research grants, so it therefore is likely that at least one cashflow positive quarter will be recorded before then.
As an aside, I liked the reference to ‘other regions’ in this comment:
“Japan continued to be the most significant source of revenue through television shopping channel QVC. This channel is expected to expand into other regions in 2018.”
(20min delay)