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Itaconix – Woodford pick which states it is “a world leader… with break-through economics”, so why the proposed fundraising?

By Steve Moore | Thursday 12 July 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.


Previously writing on Woodford dog Itaconix (ITX), it was Q1 trading update, ‘More cash please, Neil’ indeed!. Subsequently, the shares have been suspended due to “as a result of the requirement for further funding, the company will not be in a position to publish its annual audited accounts for the year ended 31 December 2017 by 30 June 2018, as required by AIM”. Today results and “Proposed Fundraising” announcements…

The latter describes the company as “a leading designer and manufacturer of specialty polymers” and former that it has a “proprietary process with break-through economics”. The results show… an operating loss of £5.2 million on revenue of £0.55 million, with cash down to £3.6 million and current assets over liabilities to £3 million. A leading specialty polymers company with break-through economics, you say?!? Not to worry though as apparently;

“Itaconix has made significant progress over the last two years since the acquisition of Itaconix Corporation. It has developed three products for major unmet needs with proven performance and established customer use. It has also developed a strong pipeline of active customer projects in Europe and North America. The directors estimate that the group has active customer projects with the potential of at least $30 million in annual revenues with production capacity in the US that can meet this demand, subject to the investment of capital of less than $500,000… The fundraising is being carried out predominantly to fund the operational costs of the business as it seeks to grow revenues through the commercial development of the company's portfolio of core products.”

The noted results though suggest customer use not exactly greatly established!, with it admitted “customer evaluation has taken longer than expected”, and “potential” is very different to delivery – particularly given the track record to-date here. Of course, ‘the fundraising is being carried out…’ part means it’s because it’s cash crunch ahoy.

The fundraising comprises a placing and subscription for a total of £3.3 million, and an open offer (and offer to certain US eligible participants) for a total of up to a further £1 million… at 2p per share. That compares to 6.75p on the shares being suspended! What even with the “break-through economics”, “significant progress” and “active customer projects... potential?

The company emphasises cost savings being made, but still only states “the net proceeds of the fundraising will provide the company with at least 12 months of working capital”. Cynical Bear is to update further once Woodford’s participation becomes clearer – but for me on this Woodford dog, natch, it remains bargepole ahoy.


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