Post the interim reporting period and as announced by the Company on 14 August 2017,
the Group has reached an advanced stage of negotiations with Recordati, the Groups outlicencing
and commercial partner for the sale and distribution of Fortacin in Continental
Europe, in respect of revising certain of the commercial terms set out in the previous
agreement entered into with Recordati on 16 September 2014 and effective from 26
September 2014, in respect of the rights to commercialise FortacinTM.
Under the proposed amendments to the previous agreement, the Group, acting through
Plethora Solutions (a wholly owned subsidiary of the Company), will be eligible to receive
payments of up to EUR 41 million (or approximately US$48.20 million) plus royalties after
hitting certain milestones related to the Continental European roll-out. Specifically, Plethora
Solutions will be eligible to receive:
A payment of EUR 4 million (or approximately US$4.70 million) on the effective date of
the amended out-licence agreement;
A payment of up to EUR 4 million (or approximately US$4.70 million) in total upon
first commercial sales of the Fortacin product in France, Germany, Italy, Spain and
Portugal (EUR 800,000 (or approximately US$940,000) for each of these 5 countries);
A possible payment of up to EUR 8 million (or approximately US$9.40 million) in total,
dependent on the net sales achieved by Recordati in the first 3 years of sales;
Up to EUR 25 million (or approximately US$29.39 million) in aggregate in sales-based
Tiered percentage royalties on net sales, ranging from the mid-teens to the midtwenties
for 10 years from first commercial sale, and thereafter at a single digit
percentage royalty rate.
For further details relating to the proposed amendments to the previous agreement,
shareholders and investors should refer to the section entitled Summary of proposed
amendments to the previous agreement, which appears below within this report.
Going forward, the Group will: (i) pursue the successful commercialisation of Fortacin as
quickly as possible, not only in Europe with Recordati, but also in the remaining key markets
of the North America, Latin America and Asia Pacific regions; and (ii) continue with its
existing strategy of pursuing strategic and value-led investments in the healthcare and life
Some pretty poor results coming out here, that cause me to revise down my fair value estimate on this particular company.
Current NAV is about 9.3p/share, based on the stated accounts here and the closing price for their listed holdings as of yesterday
of this, 7.5p of the NAV is realisable (listed holdings, minus trade payables plus cash).
The loan to the Diabetic Boot Company is a real shocker, in my opinion. An unsecured loan of 200k at 7% to an unlisted related party company does not appear to represent good value. Effectively, a liquid asset (MBIF shares) has been converted into a non-liquid asset for a very modest rate of return.
No update in terms of the planned "closure of the discount to NAV" that was highlighted in last year's report.
Finally, one has to take account the fact that the company has ongoing costs of c. 200k pa, which act as a material drag on any investment returns that are achieved within the portfolio.
So.... thinking this one through, if I have 7.5p/share of realisable value, and I need to account for
- a 10% annual reduction through ongoing corporate costs
- a 10-15% bid offer spread and lack of liquidity in trading
- a 5-10% discount reflecting the fact that I could, just as easily, own the underlying traded shares directly.
= 30% discount is fair value = c. 5p/share. Good value is something below this.
There is upside potential, of course, but one has to remember that Jim will take a percentage of this as a management fee, and in any case the only upside that matters is in the unlisted investments. If you think that Summit/Regent Pacific/MBIF are great value, then just buy them directly.
So, I bide my time and wait for the price to drop a bit more.
This is truly a share that keeps giving (at least to me) so I know if will seem weird to give a sell recommendation. But nonetheless I would sell if the bid goes above 9p. I have sold into this strength at 8p
The price for PEBI is, for the reasons I have posted previously, is at least 20% below NAV. The recent move of the value of Regent Pacific has increased the realisable NAV to about 11 (as Magna, the dominant holding is down in the same period).
For that reason, having happily accumulated in the 4-4.5p range, I'm out.
COMMERCIAL LAUNCH OF FORTACIN
A BREAKTHROUGH TREATMENT FOR
NOW AVAILABLE IN THE UK AND,
FROM 2017, IN CONTINENTAL EUROPE
Regent Pacific Group Limited (Regent Pacific or the Company
and together with its subsidiaries, the Group), a specialist
healthcare and life sciences investment group, is pleased to
announce the commercial launch of Fortacin in the United Kingdom
(UK). Fortacin is now immediately available in the UK by way of
prescription and, from 2017, we expect the treatment to be available
in Continental Europe. Fortacin is the first EU approved
prescription treatment for premature ejaculation (PE) that does not
act on the central nervous system.
The first batch of Fortacin will be on commercial sale, by prescription, in the UK from today.
Thereafter, Regent Pacifics commercial partner Recordati S.p.A. is expected to begin sales of
Fortacin in Italy, Spain, France, Germany, Portugal, Czech Republic, Slovakia, Poland,
Ireland, Romania and Greece in 2017 and roll-out in the rest of Europe, Russia, CIS and select
countries of North Africa. The treatment is a topical spray containing low doses of two
anaesthetics lidocaine and prilocaine that takes effect almost immediately upon application,
giving users more control without reducing pleasure.
Jamie Gibson, the Chief Executive Officer of Regent Pacific said, Now that we have
successfully launched Fortacin, long suffering PE patients in the UK will finally have a
trustworthy prescriptive remedy for the condition which is affecting one in every four men
globally. The launch will deliver a steady stream of recurring cash flow for the Group in the
years to come. Our goal is to bring Fortacin to men across the world and create substantial
returns for our shareholders.
Dr Michael Wyllie, Chief Scientific Officer of Regent Pacific said, PE is one of the most
common male sexual problems with prevalence higher than erectile dysfunction, affecting up to
600 million men globally
. It creates significant burden on health, emotion, and overall quality
of life of both men and their partners. We are therefore extremely excited to bring Fortacin to
the market, and serve the genuine need of sufferers for effective treatments.
About Regent Pacific
Regent Pacific is a diversified investment group based in Hong Kong currently holding various
corporate and strategic investments focusing on the healthcare and life sciences sectors. Its
wholly-owned subsidiary, Plethora Solutions Holdings plc, is a specialty pharmaceutical
company whose core product Fortacin is the first EU approved topical prescription treatment
for Premature Ejaculation that does not act on the central nervous system, launched in the UK
in November 2016 and subsequently in Italy, Spain, France, Germany, Portugal, Czech
Republic, Slovakia, Poland, Ireland, Romania and Greece, the rest of Europe, Russia, CIS and
certain countries of North Africa. The Group has a strong track record of investments and has
returned approximately US$298 million to shareholders in the 19 years of financial reporting
since its initial public offering.
And that excludes the uplift this month from SUMM's recent RNS's, plus any uplift from Diabetic Boot Company's upcoming reverse into LIFE:
"The Net Asset Value ("NAV") calculation for the Company as at closing on 30 September 2016 was 9.96 pence per share, including un-invested cash of GBP12,921. The portfolio is valued under IFRS at bid price.
Net Assets stand at GBP2.35 million including Investments of GBP2.33 million. This quarter's NAV represents an increase of 7.33% from the previous valuation of 9.28 pence per share, which included un-invested cash of GBP11,985. No additional management fee is due to Shellbay Investments Limited.
The reported NAV to 30 September 2016 gained mainly due to an increase in the value of the Magna Biopharma Fund investment. The Company's three principal investments continue to show significant growth prospects for 2016 and beyond. In particular we note the positive news from Summit Therapeutics plc ("Summit") on 4 October 2016 that it had entered into an exclusive licence and collaboration agreement with Sarepta Therapeutics for Summit's utrophin modulator pipeline."
I think this is Master Investor conference bounce. People who attended will have seen their stand.
This stock is a great example of the madness of crowds... Over at FastForward shares are trading at a huge premium to NAV (without much justification to speak over). Here, underadvertised, is trading at a little over 50% discount.
I said at the start of this year that the right thing to do was sell PEBI post distribution, on the basis that the remaining company was too small and illiquid (and the price too high to reflect these issues).
I remain of the view that the most likely outcome for the company is either liquidation or delisting/buyout by Jim Mellon. However, the discount to cash and quoted securities is now getting to the point where it might be worth the punt. Specifically, current NAV is 10.7p/share, of which 9.4p is realisable (cash, quoted holdings minus trade payables and ignoring unquoted holdings).
The bid offer spread is comically large now that the company has a market cap below £2m; but the patient bidder can pick up small parcels at or around 6p.
The risk here is mainly time - who knows when something will happen, or which option it will be? You could be stuck a long time waiting.
However, at prices sub 6p it is starting to look interesting.
Incidentally, the recent audited results state NAV of 11.6p/share, which was accurate at 30 June. Current NAV as of 22 Dec is 10.7p.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.