Credibility is a precious commodity, especially in small life science sector

Brendon Lau

Vantage Point Partners

Credibility is a precious commodity, especially in small life science sector. GI Dynamics (GID) is about to find that out after it owned up to a massive failing in process that caused the suspension of product delivery around the world. Its reporting system is not up to scratch in the eyes of EU regulators and it could take a month or more to fix. Recent examples where management credibility has taken a hit doesn't bode well: UBI, POH and PXS show how long managers can wonder the wilderness (and they still are!). GID needs to resume delivery in November or it will face the risk of a long-term de-rating. That would be terrible outcome as it probably needs a to undertake a capital raising in FY15. I had assumed $12m initially but think it may need as much as $20m. GID needs support of shareholders to pull that off unless it has alternative funding sources. Unless GID regains trust, any analyst price target won't be worth the paper its printed on. That's just my 2 cents...


Brendon Lau
Brendon Lau
Associate Director - Investor Relations
Vantage Point Partners

I am with Australia's leading small caps investor relations and media relations firm, Media & Capital Partners. I worked as a small caps analyst and journalist prior to MC Partners. Views are my own and should not be regarded as advice or...

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