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Premaitha - all sorts of fun and games: buy

By HotStockRockets | Thursday 14 April 2016


Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


The shares of Premaitha (NIPT) have been all over the shop since what was a cracking year end trading statement on Monday. The reason is the cackhanded disposal of Rupert Lywood's remaining 17.9% stake. We thought he was locked in following his last dump on 9 March and a statement signed off by broker Finncap. Weasel words. His shares were placed by Finncap at just 6.5p with directors taking some and solid institutions Helium, Henderson and Hargreave Hale taking the rest. The overhang is now gone but boy has it crushed the shares. Without Lywood's "assistance" since last summer we think the shares would be 20p today. But he is now out of the picture.

The trading statement was great. Sales in the year to March 31 2015 will be £2.5 million but that is largely down to contracts won in H2. The annualised run rate on the contracts already secured - ie base case revenues for the current year is now c£4.5 million and since Premaitha continues to win a stack of new contracts we feel very relaxed indeed with full year forecasts of £7 million sales.

That would see the company make a loss of £1-2 million but it has the cash and we are steered that by Q4 it will be cash generative and ready for a step change in sales for next year of c£14 million. That would imply profits of £2-3 million. It is our belief that risks to forecasts for this year and next are very much on the downside. Looking forward to the year to march 2019 is more a guesstimate than a forecast but we'd expect sales of £21 million plus and profits of £6 million plus.

The market cap at 9p - the price now - is just £20 million. The company has plenty of cash but clearly the two risks are the speed of roll-out and the Illumina patent challenge. We think Premaitha is delivering on rollout and expect more contract wins very soon to drive a further re-rating. As for Illumina we believe that Premaitha will prevail against a US corporate bully with form in terms of legal bullying but also of losing many of its spurious cases.

Premaitha shares remain a buy.

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More on NIPT


Comments

4 comments

  1. Glancing aside from the diminishing USP in their sole product, increasing CE-IVD competition by year end, no formal company issued sales forecasts, no financial calendar, and no product route map…this remains a Buy as it’s a stock in full AIM pump and dump mode. That the self-styled “Sheriff of AIM” endorses a practice where timings and details of Interim Statements are announced on a paid for private blog is interesting as well was the share target of 30p last Christmas. Similarly 5x + Broker ratings by Panmure Gordon and Finncap in March / April of 24p as these shares were being sold privately for 6.5p despite assurances in the March RNS.

    In terms of the figures quoted above there is a bit of discrepancy again between the sales forecasts of Hardman and Panmure Gordon. As per Hardman we were told that Sales for FY16 would be £7m and from PG that would be £9m. This compares to a break even target of £11m from a monthly cash burn of £600k-£700k as per Hardman. The current cash position in light of the Dec cash position of £6.5m plus £3m Thermo Fisher cash loan suggests a monthly burn rate of £1.4m. This suggests each contract is facilitated through Premaitha providing financing of £250k for the development of a processing lab. If the sales target is £14m then this is higher than the PG forecasts and the BOD need to guide their forecasts.

    TW Note - Sachin please can you tell me when I dumped 1 single share. I have only been a buyer as has been the board. For a P&D you need a sell. I look forward to your apology for your defamatory remarks

  2. Sachin

    Just for first line shows that you are a deluded fantasist. Diminishing USP. Hmmm so why is it getting ever more 3 year contracts so sales are ramping up. You are just talking cock

    t

  3. The CEO of Loxbridge is Charles Roberts, who is a Non-Executive D‎irector of Premaitha. The CEO of Premaitha, Dr Steven Little, is the VP of Diagnostics of Loxbridge. The previous II Loxbridge sold 12.4m of shares in Premaitha in a poorly managed share sale despite the two respective CEOs working together though both will benefit via Loxbridge. That Dr Little and Dr Charles Roberts are still holding each of their respective Directorships in each other’s company could be a reflection of how blind sided they too were or that the new Liquid Biopsy IP will come from Loxbridge. That Premaitha’s CEO doesn’t think Rupert Lywood is a ‘tool’ is evident by his continued Directorship at Loxbridge. Or perhaps as  an Englishmen and not an American he doesn’t understand the term. It should be noted that Premaitha was only incorporated to buy the CE-IVD IP from Zoragen. 

    Well onwards and upwards, can’t get any lower, despite the insider knowledge though there’s plenty claiming credit they’ve bought the bottom through the expertise . Good thing we don’t have to deal with challengers eh? Share Propehts have trumpeted this stock for 2 years now so let’s see if it is three year finally to call things right. ‎All the best for 2017!

  4. Sachers
    Its a conviction buy at this stage with court case coming . However , the sales growth was better than I expected and new deals outside the reach of patent are coming through . There can be no doubt the product is getting sales traction . Obviously Tom was an insider from the very birth and first mention on HSR . comes with the territory on new or rebirths that someone will be . However , I made money on it first time and I am back in at 8.25 p as an opening position as I think it has legs . Just dont put the ranch on it and all will be sweet . I shall garner more shares near the court case ;-)


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