Ian Cassel

Long only, special situations, growth at reasonable price, research analyst
Ian Cassel
Long only, special situations, growth at reasonable price, research analyst
Contributor since: 2009
Good writeup. The company has one of the best competitive positions I've ever seen in a microcap. I enjoyed your "illiquidity" analysis as well.
Management and board ownership is 36.6%. Yahoo finance and some other places book John and Leann Saunders ownership twice which is an error. They own a total of 7.3m shares.
Good writeup. Having a monopoly in a niche market that is expanding rapidly is a good position to be in. Just ask Peter Thiel.
Up until 2014, the company was mostly funded by insiders, board members, friends & family. They continue to step up:
I think the more recent data from the double blinded Danish trials shows it detects as well early stage as late in the 59 patients spread over the four stages, http://bit.ly/1Mqm3rQ but as you say we will see when the full study is released and published, but this is very encouraging.
Volition would definitely use an external CLIA lab to validate and submit for approval. In many ways the simplicity of the ELISA test make their tests ideal for the CLIA lab route, EXAS and EPGNY are very complicated and expensive tests and therefore not as suitable for an LDT. That being said, the main game as you say will be with the FDA. Volition has had great success in obtaining samples for a fraction of the cost of others due to the very small amount of blood required, it is only requires a few percent of the total blood draw. For example the 14,000 prospective Danish screening trial is costing about $1.8 million. A US trial would be more, but not massively. I agree, the rest of the world including China is also very important, and very fertile ground for a low cost blood test. It will be a very interesting year indeed.
VNRX completed a meaningful capital raise and uplisting to the NYSE, it should now start to get on the institutional radars. Post capital raise, VNRX trading at 3% of EXAS valuation.
2-Year extension with US Foods announced yesterday which addresses my Risk #1.
This significantly de-risks the core business likely adding a bit of premium into the value of the Direct-to-Chef business. Not surprised to see the stock reacting favorably.
The past is the past. The share structure has always been hairy, but now it is getting cleaned up. It's why I don't base valuation on the basic share count, and base it on somewhere in the middle of the basic and fully diluted. I love the fact they issued all stock for the purchase. Fresh Diet management and shareholder are completely aligned with IVFH shareholders.
Yes, I believe it was a situation where IVFH was at the right place at the right time. The Fresh Diet management team that came in in mid 2013, who also put in seven figures into the company, did about all they could from a cost cutting standpoint, but needed the resources and talent to now grow the business. There are lots of synergies between IVFH and The Fresh Diet that would allow further cost reduction. Furthermore the capital infusion from IVFH as well as having a nicely cash flowing Direct-to-Chef business gives them a non dilutive way of funding the turnaround over the next couple quarters. The announcement yesterday of a new CEO at The Fresh Diet is a big deal. The new CEO with his background founding, marketing, growing, and then selling businesses in the food delivery space is very fitting. I would expect The Fresh Diet to be worth far more than 2x Sales once it starts growing again and a likely acquisition target for NTRI whom the new CEO sold his company to. I guess we'll just wait and see.
a great addition..game on
The Fresh Diet Names Foodtech Pioneer Bryan Janeczko as its New CEO
Thanks Mike
Your welcome. It's been a great year for BioSyent and its shareholders. It could certainly be one of those stocks that goes to $20-30 in the next few years. The hard part will be trying to find another one like BioSyent. Happy Holidays.
Significant stock price movements need to be absorbed, so it's healthy to consolidate for a while. Buying often happens in waves, and the company has material milestones over the next 12 months that IF successful should add tens if not hundreds of millions of valuation. But it doesn't happen overnight, and the company still has a bit to prove. I've held the stock for years and I plan to hold, so whether it's at $2-5-7 doesn't mean much except to make the brokerage statement look a bit bigger or smaller. It will certainly be an exciting one to follow.
Some additional data on trial results
No, they are all people who had symptoms of cancer. Only a fraction (less than 10%) actually had cancer.
Yes, colonoscopy is the gold standard for detection of colorectal cancer. Unfortunately it is expensive ($3,000 per), and only about half of eligible people actually take a colonoscopy. Same issue with fecal tests at $500+ per test, and only half of people take it. No one wants to handle their own feces. Volition's test wouldn't replace the Colonoscopy, it would be used as a front line screen. 84% is accuracy is quite good. Combine that with $75 per test or less, with high compliance, and the potential market is quite staggering. More clinical trials will be needed which is what the company is doing. Check back in 6 months.
The company has historically been funded, several million, by insiders and the board. Director bought another 5,000 shares this week in the market.
This wasn't meant to be a short thesis on EXAS. In fact the higher EXAS valuation the better. If VNRX can duplicate their results in their large screening trials (first results in 6 months), the stock will likely be multiples higher. But an investment like this isn't for widows and orphans.
also worth mentioning NonGMO a big tailwind for Where Food Comes From (WFCF), the leader in third party verification of food production practices in the country, covering beef, pork, poultry, eggs, and dairy. They do most of the verification for Whole Foods currently and will be doing the bulk of the new verification for their NonGMO program on the protein side.
I don't take any writer seriously unless they have their money on the line
Put Your Money Where Your Mouth Is Or Shut Your Mouth
Exactly, that is what I was saying. If it trades 50,000 shares they can sell 5,000, if it trades 500,000 they can sell 50,000. It's not a limiting factor on the stock price. In the end I don't mind it because it at least provides liquidity to the stock. I think it's very fair for both sides and keeps an orderly market. I don't know if they will be paid back or not, and that is why I doubled the OS.
As I said in my response, yes they can, it's a note, so they can pay it back, but the note holders have been there for several years. I'm sure they are in good standing with them, and the current situation isn't a bad one. The note holders are locked down and under leak out, they can't be more than 10% of the daily volume, so there is no ceiling on the stock.
The debt is very manageable, company produced $500k in cash in Q4 and rising. The convertible note holders are locked down. They can't own more than 9.9% of the company, they can only convert-sell 10% of the daily volume, so it's very manageable. Look at Page 11 in their 10K. However, one would assume that some or all of this note could/would be paid back (limiting dilution). That said, I've doubled the outstanding shares in my estimates, which is why I used $20m market cap in this writeup and not $10m.
Thanks Tom. I've made decent money in situations like this where a well run microcap is trading at a fraction of other companies in the same peer group. Similar to the disconnect I wrote about 18 months ago with VTNR and HCCI. Now institutions are starting to pile into VTNR and the gap is closing. The fully valued institutionally endorsed names stay where they are or pull back in a bit while the company no one knew about goes up.
Yeah it doesn't help that 30% of the TSXV has less than $100,000 of cash in the bank. A much overlooked area are is the non-resource microcaps in Canada which have been doing extremely well.
Good article Igor. Here is a presentation with management we did on MicroCapClub about a month ago for anyone interested: http://bit.ly/1dUcm07
They have been more consistently profitable than meets the eye, you just have to back out the non-cash charges they take because of the notes. Easier to just look at the operating income in their case since they won't be paying taxes for a while. But your conclusion is correct, the earnings have been masked (looks worse than what it is) which has helped to keep the story under the radar.
Nice writeup John. You laid out the thesis very well.
Been following this one on MicroCapClub for some time. An interesting story, thanks for the writeup.
Just got to pick your spots as the stock is very illiquid.
First institutional filer 13G