Why the 6/1/09 cut-off date for GTC to redeem the loan?
I think the answer is clear. Lately, the FDA has routinely been missing PDUFA dates and has been taking an extra three months or so to complete its reviews. Thus, there is no assurance that the FDA will act by the Feb 2009 PDUFA date for the ATryn BLA, but there is a high likelihood that the FDA will act no later than May 2008.
If the FDA’s action on the ATryn BLA is a full-fledged approval or a response that leaves only minor issues to be resolved, GTC can presumably engineer a buyout or merger transaction then at a substantial premium to the current share price. In this case, the only permanent cost of today’s financing transaction will be the dilution from the warrant exercises, which is severe but manageable, IMO, and the modest interest on the loan between now and June.
(On the other hand, if by some chance the above plan is not the impetus for today’s financing deal, then it ranks as one of the worst biotech financings I’ve ever seen.)
I expected—and would have preferred—a buyout or merger to be consummated right now. But, evidently, there was no deal to be had without FDA approval of ATryn.
Hence, baring a major development such as an FoB partnership with a substantial up-front payment to GTC, it looks like this stock will be dead money until the FDA renders its decision on the ATryn BLA and the overhang from the converts can be lifted.
p.s. In an earlier version of this post that I deleted, I erroneously implied that GTC could unwind the warrants for $1.5M. In fact, it is LFB who can unwind the warrants for $1.5M.
“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”
