Realm Therapeutics PLC (RLM)

[WickedLester]

I realise there may not be too much interest in some of my small cap suggestions, the board seems to cater more to those that are looking to buy large caps for long term growth but I'll persevere.

I found this company when doing a trawl of the LSE website for new opportunities.

I don't know very much about their IP but this is not my reason for buying some shares recently.

Basically the company has put itself up for sale and is in discussions with a number of parties. The reasons I think this is an attractive risk reward situation at this stage is because at the end of October they state that they had around $20m in cash and equivalents (£15m) yet the market cap is just £8.5m. Cash burn appears to be around $1m a month but I expect this to fall quite a lot now that they have thrown in the towel and are looking at realising value. They appear to be looking at a reverse takeover by a company in the same sector. There is some logic to this as RLM has very large tax losses (over £100m) which may have some value. They are also separately in talks to sell their IP which may or may not have value.

I have therefore taken on a punt on some sort of value enhancing deal being achieved and if it's not I can only imagine they will shut up shop completely and return the remaining cash to shareholders, I can't see what else they can do tbh, they certainly can't decide to start the business up again and spend the remaining cash.

Therefore I think there is a possibility of a value enhancing deal being struck early in the new year and if not I hope there will be enough cash left that i'll get my investment back.

Thoughts and comments welcome.