Hands down, Phylogica (ASX : PYC) is one of the most wasteful, pointless and irrelevant ASX-listed biotech companies. I have previously written about this utter farce of a company and frankly speaking, I had nothing to add to the discussion when PYC announced their successful fundraising last week of ~$10m smackeroos. I had nothing positive to say about the outcome and despite a bit of goading from readers, I could hardly justify wasting the digit muscle movement to comment. All this financing amounts to is another ten million bucks to piss away on meaningless “discovery” programs (I use that in the loosest sense of the word) and the odd animal model (if you are lucky). To be clear, the fundraising is not enough money to move the needle in any meaningful way whatsoever, but plenty of money to keep the company’s thoroughly underwhelming executive team living high for another two years or so, and at least another 8-10 shiny quarterly shareholder news letters.
Well done, Pattersons. And especially well done to Dr. Hockings for the underwriting of the underwriting (as it were) and the tasty fee that must have ensued. What a great way to achieve shareholder confidence while at the same time effectively taking control of the company. It really gives me a lot of confidence and comfort in PYC’s independent and impartial board when almost half of the equity participation of the top 20 shareholders (at 57% of the total cap table) is effectively under control of one person. Put Hockings and Sietsma together, and you basically have an immovable voting bloc in the company.
To be clear, it’s an immovable voting bloc in a completely shithouse company, but an immovable voting bloc nonetheless.
So here is my big idea. I know that PYC doesn’t have any big ideas – or at least none that are evident from its currently articulated commercial strategy (unless they completely pulled the wool over shareholder’s eyes in the last prospectus). Perhaps there is some lucrative licensing deal waiting in the the wings, or perhaps after frittering away the thick-end of $40m Richard and the team finally found something useful while gazing into a petri dish.
Though I doubt it…
I reckon that Dr. Hockings should take the company private. He now controls the company and he’s obviously got the cash to throw around. If I were a shareholder in PYC I wouldn’t be too thrilled about the current situation, so I am pretty sure with almost 60% of the cap table held by 20 shareholders, that a reasonable number can be taken out fairly easily and possibly even on the cheap. I mean, let’s face it, what is the point of being a “public company” when you are essentially under the control of an individual, it sort of defeats the purpose doesn’t it? Why don’t you guys take the company down for a while so you don’t have to waste $100k a month on being a public company – at the very least de-list so you don’t have to bother us with your pointless news flow anymore. Do something useful with the $10m (if you can) and if you manage to show that you are capable of accomplishing a scientifically meaningful outcome, maybe come back and see us again.
Oh, and Richard? I had meant to previously pass comment on your ABC piece back in July. Yes, it is tough for Australian biotech companies to raise seed funding. Why? Because investors look at completely ridiculous and wasteful companies like yours, and they get turned off the whole sector. You’ve now raised $50m (net of fees and underwriter and sub-underwriter commissions) and you’ve delivered precisely nothing. And you never will.
On behalf of all the rest of Australia’s biotech entrepreneurs, thanks a bunch.