51 Cent DXD – Unique Genomics / Diagnostics

genomics biotech stocks

MicroCap public companies in this genomics industry are difficult to find. Read their website for more information, but the potential here may be significant. I like “unique” companies and this is definitely unique.

lymphoma cancer

I estimate their net working capital is in the range of $1M so they will need to finance this summer. Dilution is always a risk with small companies in the life sciences industry – until they have a commercial product or large partner. However, at that stage, the valuation can also change dramatically.

This type of company is unique enough that it can become a takeover / merger target – at a very high valuation. However, that may be a year or more down the road. For now, we would be dependent upon material news or sector strength. In a corporate update recently sent, the CEO stated the following:

“Recently, our software platform has attracted partnership discussions from major biopharma companies. You can catch quite a few additional company highlights in the investor section of our website. We anticipate our first clinical product for commercial use by the end of 2017”

This video does a very good job explaining their technology:

http://www.3dsignatures.com/wp-content/uploads/2017/03/3dtt_3ds001_animation_en_1080p_high.webm

Further insight here:

http://www.3dsignatures.com/investors/

Their IR contact is Hugh Rogers

204 582 0922  / hugh.rogers@3dsignatures.com

 

CHMA:NASD $1.35 has USD $66M Cash worth $2.69

chiasma microcap stocks

Life Science microcap investors may want to take a look at Cash Rich Chiasma (CHMA:NASD $1.35). I estimate current net cash near USD $66M or $2.69/share. They need to bring down their burn rate but maybe they will eventually leverage this war chest of cash to rebuild shareholder value.

http://www.chiasmapharma.com

Qtrly Burn – Approx. $7.5M / Shares Out: 24.5 million
2016 they spent $31M on R&D and $22M on G&A

Chiasma is focused on improving the lives of patients who face challenges associated with their existing treatments for rare and serious chronic diseases. Employing its Transient Permeability Enhancer (TPE®) technology platform, Chiasma seeks to develop oral medications that are currently available only as injections.

Continued Risk to Oil Sector Investors

oil stocks Since April I have been posting about the risks to oil sector investors. Among other issues shown below, Rig Count and Price/Inventory spread remains a growing concern. Below are chart links and factors to pay attention to.

> Price & Inventory Spread is a growing concern (see chart below)

> The rig count has risen 121.7% from the same period in 2016. US crude oil rigs have risen for 22 consecutive weeks.

> Oil inventory held by the 35-country membership of the OECD hit a higher surplus then when OPEC first reached its agreement to cut production in late November.

> Russia has stated it can live indefinitely with $40 oil. In addition to growing production from Libya and Nigeria, U.S. shale oil production continues to grow dramatically. The EIA is calling for U.S. production, which is now at record highs, to average about 10.2 million barrels of oil per day by Q4/18.

> Gasoline inventories currently sit at 242 million barrels, or 9 percent, above the five-year average of 223 million barrels

Price / Inventory Spread Chart & Insight:
http://marketrealist.com/2017/06/brent-wti-spread-why-its-crucial-for-energy-investors-2/

Also note rising oil rig count:
http://marketrealist.com/2017/06/will-us-crude-oil-rig-count-pressure-oil-prices/

 

MOGO Update: 200% 8mth Gain

tsx microcap stocks fintechMogo Finance Technology (MOGO:TSX $4.05)

http://investors.mogo.ca/

My report on MOGO produced substantial gains on a Fintech (online banking and financial services) that the Canadian investment community chose to ignore. It was a dramatic turnaround story but investors were more focused on the ugly chart versus the opportunity moving forward.

For those that might still own it, here is an update from the company.

Financing Update / Growth

  • Completed a successful $15.0 million convertible debenture financing – led by Michael Wekerle and other high-profile investors
  • New capital will unlock ~$60mm of loan capital Mogo can use to grow its highly profitable loan product
  • Over the next 12-18 months the loan portfolio will grow dramatically (it was $68mm at end of Q1 2017)
  • Combined with growth in new products, Mogo is positioned to deliver strong top-line growth again and expects accelerating revenue growth beginning in the second half of 2017
  • After several quarters of flat to declining revenue, we expect this will help create excitement around the growth prospects for 2018 and beyond

Valuation

  • While Mogo was the 3rd best performing stock on the TSX YTD through May 2017, the company remains undervalued relative to peer group
  • On a 2018 basis, Mogo trades at ~2.1x net sales vs. FinTech names at an average ~3.9x and even higher for high-growth Canadian techs such as Shopify (10x)
  • Many investors and analysts believe the discount to peers will be reduced as Mogo resumes growth and confidence grows in 2018 sales estimates

Platform value

The stock has latent value based on the value of the tech platform alone. Mogo has invested ~$150 Million into platform development. Canadian Zenbanx, (mobile based savings accounts), was acquired in Feb for ~US$100 mln (estimated ~10x sales) by US online personal finance company, Social Finance (SoFi).

Insider Buying

Five insiders have spent $5.3-million picking up shares in the market over the past three months.

_____________________________________

While this stock was presented to subscribers near $1.25, it was also provided to the public at a very attractive valuation. That original Linkedin report is available here:

https://www.linkedin.com/pulse/fintech-mogo-27m-mcap-80m-spent-software-development-danny-deadlock

 

 

1mth 90% Gain & Our 2nd Q2 Takeover

microcap stocks tsx tsxv cse

May was a profitable month for us. We hit a 3mth 60% Gain on the $342 Million takeover of Merus Labs (MSL:TSX $1.62). And the last week of May was takeover number two as a NASDAQ company announced the takeover of ViXS (VXS:TSX 34 cents) – which I introduced to MicroCap subscribers (and social media / Linkedin followers) early May near 20 cents.

ViXS produced a great gain… but at a valuation I am not the least bit happy with.

http://www.businesswire.com/news/home/20170518006426/en/Pixelworks-Acquire-ViXS-Systems

Pixelworks is offering only USD $20M and it appears VXS management are happy with this – they must have impressive golden parachutes built into the deal ! Techs of this size should be valued at 1 to 2 times annual revenue. So this offer appears close to 1 times their revenue over the next year. Seems low, but reasonable.

However, in ALL the ViXS corporate presentations, they have emphasized their HUGE patent portfolio and the fact it is independently valued at (an estimated) USD $50M to $80M.

Are they just GIVING the patent portfolio away??  If this deal is allowed to go through under the current terms, then ViXS shareholders are NOT getting fair value for their investment.

I personally have no intention of selling as I will hold out for a renegotiated deal OR a competing offer.

_______________________________________

For Reference, below is my Introduction of VXS from April 23rd

VXS has seen two sellers from Canaccord and BMO dumping this past week near the 52wk low. I am convinced this is setting up a great mid to long term opportunity in the junior tech sector.

ViXS Systems (VXS.T 20 cents)

www.vixs.com

Shares Outstanding: 73M / Market Cap: $15M

Estimated Revenue for the Upcoming Year $20 to $30 Million *

Revenue for the year ending Jan 31/17: $29.5 Million

Huge (Unrecognized) Patent Portfolio [>500] potentially worth $50 to $100M

Strong growth potential in UHD / HDR TV and Internet Video

Toronto HQ / Hong Kong R&D / Sales in Asia, Europe, N. America / > 85% of employees are engineers

* April 12th it was announced that VXS would sell a high cost, non-core division for $5M USD

Note that the Graphics below were taken from their Jan/17 Corporate Presentation

https://www.vixs.com/ir-presentations/

“Current infrastructure is built on 20 year old technology that is not optimized to handle today’s video traffic”

The ViXS market cap is only $15M yet there are two specific factors that should make this a very strong speculation from 17 to 20 cents (excellent liquidity lately in the 18 to 20 cent range).

1) They specialize in technology for Internet Video and displays needing 4K UHD and HDR. These are notable areas of strong growth in the coming years.

2) Most important – and incredibly overlooked – is their enormous patent portfolio. They own more than 500 Patents (40% approved and 60% pending). This should be extremely valuable. Possibly in the range of $50M to $100 million or 70 cents to $1.50 per share. The market is completely overlooking this value.

Over the next month, if you continue to see sellers in the teens or near 20 cents, I am convinced this is worth tucking away.

 

 

Blog Disclaimer / Disclosure

Danny Deadlock and no person or company he is affiliated with receives compensation in any form (either directly or indirectly) for preparation or distribution of information on this MicroCap Blog. No one from the public companies discussed (including officers and directors) has been contacted concerning the content or distribution of this information. It has been prepared completely independent of the public company (PubCo) – other than graphics or text that are often utilized from their publicly available corporate presentation or website.

Danny Deadlock is often a small shareholder of any PubCo discussed (purchased in the open market or in a financing) and he may be an active buyer or seller of stock at any time this information is in circulation. This complimentary research is for informational / educational purposes only and will also serve as a marketing / advertising tool for MicroCap.com.

Securities discussed on this blog are high-risk, time and market sensitive. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer, solicitation or recommendation to buy or sell a PubCo. Neither Danny Deadlock nor MicroCap.com (including any directors, officers, or employees) makes any representation or warranty in respect of the contents of this blog or otherwise.  In particular, no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information or opinions contained herein, which have not been independently verified. No person shall have any right of action (except in case of fraud) against Danny Deadlock or MicroCap.com.

While Danny Deadlock has used best efforts to ensure the accuracy and completeness of the information presented, such information has NOT been independently audited or verified and Danny Deadlock (or any affiliated companies) assumes no responsibility for its accuracy. The forward-looking information contained in this information (and included on this website) is expressly qualified by this cautionary statement.

Danny Deadlock is not a broker, dealer, or investment advisor. Readers are cautioned to conduct their own research and due diligence and obtain professional advice before making any investment decisions. Danny Deadlock and MicroCap.com will not be liable for any loss or damage caused by a reader’s reliance on information contained on the MicroCap.com website. Readers are solely responsible for their own investment decisions.

Blog Launch

microcap stocksWhile MicroCap.com is an investment letter for paid subscribers, I decided in the summer of 2017 to provide some research for free (complimentary).

This blog will include the occasional (new idea) and updates on stocks I have posted to the blog.

Occasionally I will also throw in random insight specific to the stock market or overall portfolio management.

Keep in mind that my focus is microcap (penny stocks) traded on the TSX, TSXV, and the CSE. This will include stocks (initially) trading in the range of 5 cents to $2, and with a maximum market cap of $200M Canadian – typically far below that threshold.

This is a niche aspect of investing (educated gambling) that I have specialized in for over 30 years and have published online since 1998 – through MicroCap.com

Danny Deadlock / MicroCap Equity Analyst