The Company that Advised Itself

Last night as my plane leveled off at 30,000 ft I decided to get stuck into a glass of wine and the Biotech Daily. While flicking through the bioscience news de jour, I saw the following comment about IQ3 Group (ASX : IQ3):

IQ3 says it has been appointed as corporate advisor to the Iqnovate agreement to acquire 50 percent of Emedia Creative and the proposed ASX listing of Emedia. IQ3 chief executive officer Dr George Syrmalis said that Iqnovate was “a ground breaking, innovative business … joining forces with a most inspiring and creative media house Emedia, creating a partnership that communicates life sciences in a coherent manner across society”.

IQ3 said that Dr Syrmalis was also the chief executive officer of Iqnovate.

IQ3 was untraded at 31.5 cents.

Now, I am a big fan of the Biotech Daily, and I particularly enjoy Langsam’s dry commentary. I read this passage a few times and it left me scratching my head…. so, does that mean that IQ3 basically advised itself???

Yes – that appears to the case.

Truthfully, I have never paid much attention to this company. I was aware that they were some sort of a life sciences advisory firm and that they’d completed a small IPO earlier this year that raised a few million bucks. They also seem to have a bunch of other IPOs on the go, including Farmaforce (not to be confused with PharmaForce or Farmafarce) and the recent Emedia announcement. This is a company that seems to have more “arms” than an octopus, and a greater propensity for the random stashing of marginally interesting companies than some kind of corporate sewer rat.

But what does the company actually do?

Honestly, I don’t know.

I read through the marketing guff on the website and aside from garnering that IQ3 is apparently the world’s first biotechnology corporate financial advisory and asset management firm (utter bollocks – but let’s just ignore Leerink, BVF, OrbiMed … or….even a Torreya Partners-type firm for a minute) and that they have a lot of pieces to the “group”, it was all just a bit confusing. I watched IQ3’s corporate video, which was very nice. It made me wonder if perhaps the company is developing a time machine and periodically organises birthday parties.

It’s well worth a watch.

Although given that this is a biotech advisory firm, the time lapse video is perhaps more suggestive of something from Species. You know what I am talking about – a top secret gene splicing project that blends alien DNA with human DNA and results in a chimeric organism that goes from juvenile to full reproductive maturity (and super-hotness) in about 3 hours. You can watch that particular trailer here. I think IQ3 borrowed a lot of visual cues from the Species trailer and I think it is more than a little bit coincidental the alien DNA in Species was picked up by the Parkes Telescope in Australia.

But all mockery aside (and no disrespect intended to the little girl with cancer in the movie – though like the Species trailer she also turns out pretty hot in the end when she grows up, which is good), I really wanted to understand what the Biotech Daily was talking about and so I did the obligatory google search of “IQ3” and “Emedia Creative”. I kept getting a primary hit to the home page of IQ3 but when I looked around on the page I couldn’t see any useful information. Only Farmafarce…. er… force.

It was very perplexing.

Then… at the very bottom of IQ3’s home page, in almost imperceptible dark blue lettering, I saw a size 7 font “Emedia Creative” link. Huh? I click on the link and I get directed to a web page for a product and website design company, you know, the company that put IQ3’s web site together. There is even a client testimonial from George Syrmalis himself, which I really liked:

“Everything is just immaculate, if I were to use the words sexy and divine in one sentence, then I would use them to describe this web site!!!! You’ve done a great job!!! If creativity could kill you would be a weapon of mass destruction.”

Very generous.

Well, apparently, Emedia Creative is so sexy, and so divine, that one morning – while George Syrmalis was having an M&A discussion with … er… George Syrmalis, he decided that he should take a chunk of the action. Despite being the world’s first biotechnology-specific advisory firm, cashed up with a mini-IPO no less, IQ3 decided to advise itself on the partial acquisition (and apparently planned listing) of … drum roll … its web site designer! I can barely imagine the palpable excitement when George called George to confirm that the transaction was complete and to prepare the ASX disclosure.

I just hope that George’s advisory fees to George were reasonable.

Now, I don’t really know what the game plan is for IQ3 or where all this is going. Possibly the company has a vision about bringing together investing, media, product sales and commercialisation all under one roof. But it also tells you a lot about what the firm thinks about Australia’s biotechnology industry when the first transaction it manages to pull off post-IPO seems to be the partial acquisition of its web design contractor. It obviously feels there are pretty slim pickings out there at the moment.

Weapon of mass (shareholder value) destruction indeed…


Feature image taken from the still of a classic but also slightly disgusting youtube video of a snake eating itself. It seemed apt.

16 thoughts on “The Company that Advised Itself

  1. and we wonder (or do we?) why the sector (and the ASX as a whole really) has a bad rap internationally!

    Gave me a good morning chuckle though – thanks 🙂

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  2. Another great article Chris.
    May I say, You are the Shakespeare of Biotech (or at least the ‘Shake a spear’ )
    Entertaining and enlightening.
    Just an aside , do you ever sit back and get a smug feeling of self satisfaction that you just nailed it?
    You certainly should.
    Cheers

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  3. iQ3 is a very strange company.

    It is the ultimate “concept stock” — just a vision of what could be, but no real business yet. iQ3’s vision is to create the whole financial and research support structure to help Australian biotech scientists to turn their discoveries into commercial success. Can iQ3 deliver on this grand vision? I quickly scanned their prospectus. There didn’t seem to be anything solid there to suggest brilliant minds with a brilliant track record in this area — just lots of vision talk.

    There is one research report out — by Alpha Securities (an unfamiliar name to me). It’s a paid report, and again, it’s full of vision stuff. I checked their company announcements. At first glance iQ3 sounds like they are winning lots of business as a corporate advisor helping new biotechs to list on the ASX. For example, there is FarmaForce (now successfully listed), Clinical Research Corporation, and emedia Creative. iQ3 was also appointed lead manager in arranging a $5m private placement for IQNovate (IQX), a Newcastle stock exchange listed company. iQ3 also announced it’s been appointed by IQX to help it raise $100m (!!!)

    All these corporate advisor wins in just a few months sound fabulous for iQ3 delivering on its grand vision, except all these businesses are iQ3 subsidiary businesses. FarmaForce and Clinical Research Corporation are subsidiaries of IQNovate (IQX), which in turn, is linked to iQ3. And as Long Tail mentioned , eMedia Creative appears to be the website designer for iQ3. This excerpt from the iQ3 explains the inter-connections:

    The Board of iQ3Corp has determined that the Company is a related party to iQX Ltd (a specialised Life Science investment company and its wholly owned subsidiary iQX Investment Services Pty Ltd) and iQnovate Ltd (a Life Science advisory company – and its wholly owned subsidiaries FarmaForce Pty Ltd and Clinical Research Corporation Pty Ltd) due to:

    • the common employment of Mr Spiro Sakiris and the common directorship of Mr Kosmas Dimitriou. Mr Dimitriou is a Non-Executive Director member of iQX Ltd and iQ3Corp Ltd. Mr Sakiris is an Executive Director, Chief Financial Officer and Chief Operating Officer of iQ3Corp. Mr Sakiris also holds the office of Chief Financial Officer and Chief Operating Officer of both iQX Ltd and iQnovate Ltd.

    • the possible influence and control which may be exerted by those of iQ3Corp’s substantial shareholders who also hold executive office positions with iQX Ltd and iQnovate Ltd. Zeolite Holdings Pty Ltd and Babi Holdings Pty Ltd is each a substantial shareholder of iQ3Corp and are entities controlled by Mr Con Tsigounis. Mr Tsigounis is also an Executive Director of iQnovate Ltd. Derivative Investments Pty Ltd and Life Science Investments Pty Ltd is each a substantial shareholder of iQ3Corp and are entities controlled by Dr George Syrmalis. Dr Syrmalis is also an Executive Director of iQnovate Ltd and iQX Ltd. Active Immunity Investments Pty Ltd and Oceana Horizon Investments Pty Ltd is each a substantial shareholder of iQ3Corp and are entities controlled by Mr Spiro Sakiris.

    How far can iQ3 go in their manifestation of their grand vision? Timing is considered to be a key determinant of entrepreneurial success. I read in a recent AFR article that there’s a wall of money keen to invest in the Australian life sciences industry. It’s a worrying thought but it appears iQ3 has already gotten some of that money, and could end up getting a lot more.

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  4. An utter Greek of a company. The meagre revenue and business iQ3 generates is through handballing money down the subsidiary companies. I’m lolling since the day George listed this trash on the NSX. 5 years on, and still no advisory relationships with biotech/research. But hey, there’s still a few pennies left to “develop relationships”, as per prospectus use of funds.

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  5. The concept of “iQ”may be perplexing for people without “vision and understanding of uniqueness of biotechnology”. But thanks to their ambitions for listing and ongoing disclosure forced by regulations, the financial reports give a good lecture in business management of fundraising from public.

    The “iQ” brand consists of iQN (NSX listed) with Farmaforce (ASX listed) and Clinical Research Corporation being its subsidiaries, iQX (NSX listed) with a VC being underway (!) and iQ3 (ASX listed).

    The revenue model is simple: 2011, iQN started with nil income that year and positive cash inflow from financing from NSX listing. Its first and only income was underpinned in 2012 when iQX started and hire iQN as its advisor. 2012, iQX started with nil income that year and positive cash inflow from financing from NSX listing. Its first and only income that year was underpinned in 2013 after iQ3 started and paid iQX for “shared consultancy fee”. And iQ3 followed its siblings’ foot print and there comes Farmaforce… back and forth. Turns out, all the money circulated within “iQ” body is from capital raising of listings of different arms.

    Behind those three cornerstones of “iQ” are a doze of family trusts and investment companies, among which are three names repeatedly emerged in those annual reports, just like in Anne’s comments. Here comes lesson 1, avoidance of consolidation. No matter how closely are they related, these companies are not literally holding shares of each other, at least at a material level to consolidate their financial reports. Otherwise, public shareholders may never see a penny on income statements. When people are told of consolidated value of “iQ”, please remind it has consolidated value for those who materially control all the entities over those small trusts not for a public investor lucky to be a witness of “changing human being’s future”

    Throughout all the prospectus, marketing materials and website, the most frequent words are “the world first”,”innovation”. Every time there are some news from the company,I doubt even if it acquired a kebab shop (FYI, no offense to kebab shops, I am a crazy fan of kebab), it must “add values” to the global biopharmaceutical industry (maybe because it serves several functions of the company). Here comes lesson 2, avoidance of valuation by trading comps, namely peer comparison. Thus, $0.3, $0.5 sounds cheap, undervalued to public shareholders again.

    As for proceed of funds, just check the scale of their marketing campaigns, media release and management salaries (not just from one company but all). After above work of assessment, if one has enough reasons to believe in their commitment to biotechnology, then please hold or add your positions of their stocks because it is may be a real “unicorn” in term of biotech and nobody wants to be blamed for the underestimation of OZ biotech industry because of “lack of vision” and “conservative”.

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  6. Chris, this iQ3 fluff is all a bit of fun. I’d love to hear your take on the iQX branch of the group and more importantly, their purported $300 million iQ Series 8 Life Science Fund…

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    • I reckon they will be able to buy a LOT of website companies with that dosh. Maybe a couple a couple of restaurants. I can also see an office works franchise and a brothel as part of the “vision”.

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  7. Judging by the grammar in the iQ3 media release, they obviously didn’t acquire a proof-reader in their 50% stake of eMedia. No need to panic though, using Queen’s English is superfluous when you’re able to “communicate life sciences in a coherent manner across society”.

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  8. Related parties and flow down of funds(management expenses) which need to be an annual exercise to keep everyone fed by the looks of things may be one thing but also worthwhile looking at the trades on every one of the IQ Global Group. Ill need to book an appointment to get a trade done, and for gods sake, for fear of starting a firestorm, dont sell! That being said the prices seem to recover very quickly on the IQN stock whenever there is a seller. Hmmm. oops NSX saw that one coming (read announcements) It appears cross shareholdings extend to cross buyer support?

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  9. Pingback: Competing for Capital? Absolutely. | The Long Tail

  10. The man behind this company George Syrmalis is crook.He has cheat many people in Greece,one of them is me.BE AWARE PEOPLE.

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