Almost zero net cash - look out below!, page-6

Exploration companies do not borrow to explore and biotech's should not borrow to do research or trials.

The reasons are the same - if you don't have a reliable cashflow to repay debts, then do not borrow.

Did you notice the interest rate that we are paying on the $20m of borrowings?

Try 9% for size.

I do not know which idiots around the board table thought that was a smart idea - but the CEO would have put it forward.

If Bionomics had royalty income that was substantial and reliable, then that would be a different situation.

But they don't.

As a result they are sailing close to the wind with net cash of circa $4m.

IF they sell the oncology assets for a large up front payment of say $40m, then they will be fine - but that has not happened to date - and I am skeptical that they will get anything like that amount of cash if thay can offload these assets.

I should not need to remind readers on this forum what happened to Neuren when they inked a $445m deal for their Rhett Syndrome compound - with a measly $10m upfront payment.

Not aware? The stock tanked about 45% in a heartbeat.

Think it could not happen to Bionomics?

Think again.

The market has been led to believe that the oncology assets were red hot and very valuable.

They have been trying to find a buyer for the best part of a year.

I suspect that they will have had interest but one must wonder why the interest has not turned into an offer.

The market have been led to believe that BNC 210 is the greatest drug discovered since penicillin - albeit for neurological disorders.

So far we have proven that it is not toxic and causes no side effects that we are aware of.

Further, we have demonstrated that there is some kind of target engagement - which is good.

However, we are miles from demonstrating efficacy and a material and measurable improvement in patient symptoms.

If the clinical trial results are anything less than spectacular, BNC 210 will be as popular with Big Pharma as has been BNC 105 and BNC 101.

Biotech is a long and frustrating game and Aussie punters have traditionally overpaid for extremely risky, long term stocks in this space.

It begs the question of what price should BNO trade at given the risks and its now fragile balance sheet?

maybe its not 60c or 50c or 40c.

If the PTSD results are good, it may be an 80c stock -or maybe Shaw stockbroking will be right at $1.50.

Maybe Bell Potter will be right at 97c or maybe Eddison research will be right.

Or maybe they will all be wrong.

The clock is ticking on this stock - they have six weeks to deliver a readout on PTSD.

Tick, tick, tick.......Net debt of $4m!

For all the risks I wonder why we bother.