Quick post on 4d pharma.  I bought back in 2017 then averaged down a touch.  This hasn’t gone well, my initial stake was at £2.47 and its now c£1.00.  It’s by far the biggest of my risky holdings.  I bought in as I have various stomach health issues that are massively helped by probiotics – so there is something in this and I believe these guys are leaders who can find and develop whatever is in it. What I have is very rare – 1/10000 of the population, of those, how many invest? Of those how many would invest in this? That, is my edge, or at least my perceived edge.

This may sound like a bit of a sketchy way to invest but one I ignored was Hutchinson China Meditech – I lived in China and was convinced Chinese medicine worked.  I very nearly invested but didnt – and the price is up 37X since!

Since I invested in 4D there has been good news, articles published in Nature, posters being nominated for awards but nothing as tangible or that is a definite money spinner.

The company is running out of money and has recently RNS’d that:

The Directors estimate that the cash held by the Group together with known receivables will be sufficient to support the current level of activities into the fourth quarter of 2019. The Directors are continuing to explore sources of finance available to the Group and have a reasonable expectation that they will be able to secure sufficient cash inflows into the Group to continue its activities for not less than twelve months from the date of approval of these accounts. They have therefore prepared the financial statements on a going concern basis.

Because the additional finance is not committed at the date of approval of these financial statements, these circumstances represent an uncertainty as to the Group’s ability to continue as a going concern.

Which is not good news.

But, there is a silver lining to all this. Management heavily own the shares and are buying more at the c£1 level and have been for a while, multiples of their salary over the last few months.  I believe they have a broader perspective than the somewhat hyperactive market.  Buys are presented below:4D pharma holdings

Given management’s large stake I believe they wouldn’t be buying in if a discounted placing was likely – it would make very little sense.  They certainly didn’t have to buy back in December – even if you believe the buying to maintain confidence argument.

It is of course possible they are deluded / mistaken and will keep buying all the way down.   I suspect we will shortly see good results from trials or some other news and the shareprice will go up.

For an example of how fast this can happen look at RENE – which I also passed on when it was trading at a fraction of book.

At present, this is about a 1.5% weight and I am down 50% on my average entry price.