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Deja Vu - (ONZ)
4/7/2016 (119264)

Deja Vu

It used to be the rule. If any company chap started talking too enthusiastically about the share price, watch out. Nigel Theobald, boss of N4 Pharma, has not quite been doing that, but pretty close. Catch him in an interview on his new business with Proactive Investors on May 23 - 'It is a new way of putting together a small company, but one I think is going to work very well and can quickly become a large healthcare company.'

You can find the interview at (http://www.proactiveinvestors.co.uk/companies/news/126256/n4-pharma-reveals-the-huge-potential-of-the-reformulation-game-126256.html). This came a few weeks after 49% of N4 was acquired by a little shell company called Onzima Ventures (ONZ). It is the N4 element which has been exciting the Onzima share price, taking it from 0.8p in May to 1.65p (after touching 1.74p).

Even after doubling at high speed, Onzima is capitalised at a mere £3m. So if it is to become a large healthcare company, the shares could have a long way to go. No wonder some punters are getting excited, and trading volumes are steep.

Let us hope it works for anyone taking a punt. Sad to say, however, this could be one exciting opportunity best watched from the sidelines. Outright gamblers might fancy a go, but for most subscribers, this is probably worth watching rather than backing right now.

Theobald has been hereabouts before. N4 is so named because it is his fourth company. He was last on the public company scene at Oxford Pharmascience (OXP) where he clearly learned how to play this game. An interview as Oxford Pharma boss with Proactive Investors on November 16, 2011, had him talking about 'reformulating off-patent or soon-to-be off-patent drugs, making them more effective or easier to take ... low overheads, & profitability by the end of next year. (Nov 2011).'

That sounds very like what he was saying in an interview on TIPTV on June 23 (https://www.youtube.com/watch?v=-LokJTesSNI&sns=tw), this time talking as boss of N4. There are quite a few bullish interviews around - there is a little list at the top of the page on the ADVFN bulletin board thread for Onzima - and the routine sounds quite attractive. The idea is to take drugs and vaccines coming off or out of patent and reformulate them. There are loads of interesting drugs listed as possibles, a patent expert has been brought in, and there are high hopes of creating a new variant of Viagra which acts without the one hour delay apparently required with the existing version. This sort of drug operation takes £3m and three years compared with £500m plus and more and five to ten years in conventional pharma.

All jolly good stuff, but vague so far on when N4 might actually manage to get into the big money. Somehow the terms of the patent deal and the agreement with the University of Queensland which bring in important elements don't seem to be in the March and April announcements of the deals, but never mind for now.

The whole financial package is a bit puzzling, perhaps. Onzima brought in 49% of N4 for £41,000 cash, 24.27m shares which cannot be sold for two years, and access to a £209,000 borrowing facility. Given that Onzima shares were around 0.6p when the deal was done, that looks a very modest price if N4 is to be tagged a great growth business just a few months later.

Perhaps it is worth looking at how Theobald fared at Oxford Pharmascience. His resignation as chief executive 'to pursue new business interests' was announced on March 5, 2014. That came with results showing that In the calendar year 2013, revenue was just over £1m, and there was a pre-tax loss of £1.5m. That compares with a pre-tax loss of £818,000 for 2012, so Theobald's hope in the November 2011 interview that there would be profitability by the end of 2012 was clearly too optimistic.

Oh well. At least the chairman was able to say in March 2014 that Oxford Pharma had reached ;an inflection point' and he was able to look forward to 'significant growth in the years ahead'. It lost £3.9m in 2015. Sadly the share price has made no great breakthrough. Running just above 4p in the summer of 2014, it rocketed to about 14p in mid-2015, but is now back down to 4.5p. This might disappoint anyone who reads in the header on the ADVFN board that Theobald grew OXP 'from nothing in 2008,floated on AIM in 2010 and today has a market cap of over £80m.' The OXP market cap is currently £55m, and the company has raised a great deal of cash along the way, without helping sustain a higher share price.

Maybe Theobald's involvement in Onzima will work better, but at this stage it is not clear how much of what N4 achieves will come through to the Onzima share price. Onzima has investments in a number of small resource companies as well as N4. When asked if Onzima will become the funding vehicle for N4, he told Proactive Investors; 'It is an option, but only one of a number of options.... each of the company’s innovations can be funded individually on a stand-alone basis, with different sources and quantum of capital dependent on the particular requirements of the drug candidate or prospective product.' See http://www.proactiveinvestors.co.uk/companies/news/126256/n4-pharma-reveals-the-huge-potential-of-the-reformulation-game-126256.html

Clearly Onzima and N4 are in the very early stages of development, and there is a whole lot of sorting out to do. Theobald, however, has no doubt he is on a winner. He told the Derby Telegraph - http://www.derbytelegraph.co.uk/kissing-frogs-paved-way-pound-60m-drugs-palace/story-29014339-detail/story.html - that it was impossible to say where the company would be in a few years, but he was confident it would be making vast sums of money.
He said' '"I believe we've got huge value potential. Just the Viagra project alone can easily bring in revenues of £300-500 million for a partner. If we're getting 5-10% royalties, we're up to £30 million royalties a year as income which, with a high-level of gross profit – we're 80% plus – that one project would be valued at £50-£60 million. That's why Onzima have invested in us. They can see there's huge potential to grow value."

Wow. Now there is a man who knows where he is going. Or does he? He told the Derby Telegraph 'I always describe it as like pouring water down a hill. You know it's going down to the bottom of the hill but you never know what route it's going to take. It depends what it hits on the way. You just have to follow the path it goes.'

It does seem a shame not to back such a confident character. If only other quoted company chappies found it so easy to look into the future and float their way to a fortune.

Onzima is starting to attract attention, and Theobald is gathering interviews galore. Perhaps he could pull it off. Perhaps he left Oxford Pharmascience because he worried that the water was running uphill, and swimming against the tide would be too tough, so he really needed to go with the flow - elsewhere.

Or - good golly, it is hard to recall ever stumbling across a chap so ready to talk about his inflated revenues and the emergent possibilities from fiddling with Viagra, all way before he has tied the big deal down. Too much, too soon. Not for me, thanks.
Ends


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