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Dear NetScientific PLC Shareholders and Stakeholders,
In advance of the annual report which will be published at the beginning of April, we would like to provide you with a brief update.
Management remains confident in the Company’s long-term prospects despite the ongoing broader market challenges. The last few months have seen significant turmoil in the public markets in the UK and globally. As with other biotech and tech focused stocks, our share price has been adversely impacted. This market volatility has now been further exacerbated with recent events in Ukraine. Nevertheless, we believe that the NetScientific model continues to provide scope for increased returns.
NetScientific PLC is continuing to progress well in accordance with its stated strategy through targeted and judicious investments, and pro-active management of our portfolio companies. We believe the company is significantly undervalued, and that the fundamentals and prospects of the Group remain strong. Our portfolio investments in the Healthcare, Sustainability and Technology sectors are addressing societal and market needs that will still be there as market volatility subsides. Our proactive portfolio company investment and management strategy also helps us take decisive actions in difficult circumstances, to protect shareholder value.
Analysis by WH Ireland’s researchers covering NetScientific have confirmed sum-of-the-parts estimates of 185p, compared to a market price of 60-70p as of at the time of writing. The continued advances in our portfolio can be seen through the RNS and RNS Reach announcements released since the half-year report announcement in September. We summarise some of the key developments below:
- NASDAQ-listed PDS Biotechnology (in which we have a 4.72% stake) has continued its progress with world-leading organisations in three Phase 2 trials with Merck, National Cancer Institute and MD Anderson, while also announcing a new programme with Mayo Clinic, and developments in the infectious disease vaccine programmes. While its price has experienced a significant decline (currently trading in the $5.50-7.00 range), analysts covering the stock from US investment banks Cantor Fitzgerald Oppenheimer, H.C. Wainwright and Alliance Global Partners have maintained a target price of $15-$25.
- ProAxsis has continued to make significant progress; leveraging grant funding to grow its offering with five new products, development of the AZ anti-body programme and expanding its markets.
- We made a further investment in EpiBone, as part of an $11m CLA including various US backers as they progress their Phase 1 trials. EpiBone is a successful NY-based growth company providing much needed regenerative bone and cartilage treatments.
- We took a strategic stake at an advantageous price in Q-Bot, an award-winning UK robotics service company, who is growing rapidly within the retrofit and energy saving sector, with a focus on value growth and route value realisation.
- NetScientific also took a 75% stake at Cetromed, a life-sciences holding company with interests in technologies and spinouts of University of Leuven. This investment was at minimal cash and balance sheet cost, utilising £150k of paper, plus warrants for the transaction.
- Sofant, a satellite and 5G antenna developer spun-out of Edinburgh University, announced the closing of a €7.3m European Space Agency Contract, of which c.50% is non-dilutive grant funding. The funding will be used to progress the commercialisation of its low-cost, low-power satellite communications platform with industry partners. Sofant’s satellite antenna technology will provide access to low-latency, super-fast satellite broadband networks. EMV Capital had earlier in the year advised on a £843k Convertible loan, with participation by the British Business Bank, NetScientific and EMV Capital investors.
- SageTech Medical has continued to make progress on its commercialisation strategy and has recently completed a c.£1m fundraise (including £100k participation by NetScientific and investors advised by EMV Capital). This will support further development and launch of the anaesthetic gas capturing and recycling system in its target sectors.
Part of our strategy is to deepen relationships with trusted deal sources in world-leading innovation centres. NetScientific’s corporate finance subsidiary EMV Capital led a first close of a £12.0m investment into Cambridge-based Martlet Capital, alongside leading private office Saranac Partners. Here EMV Capital’s syndication model provided not only a profitable deal, but also a footprint in the Cambridge high-tech cluster, with the option to pick and choose the most attractive investment opportunities that fit with our strategy.
Our stated strategy is to invest in, develop, commercialise and realise shareholder value in life sciences/healthcare, sustainability and technology companies, which offer significant growth potential, predominantly in the UK and USA as well as globally. The Group leverages trans-Atlantic relationships and global opportunities to deliver returns.
Within our broader portfolio we apply our judicious investment approach to selectively build stakes in companies, using our influence and pro-active management to drive for growth in value, then realisation of significant investment returns from both direct and advised holdings. The good progress with our portfolio in 2021 makes us well placed to further develop our chosen cohort of portfolio companies, to increase value and map out routes to exit/liquidity events.
Dr Ilian Iliev, CEO John Clarkson, Executive Chairman