GTCB is effectively an out-of-the-money call option on one of the following positive outcomes:
1. FDA approval or near-approval of ATryn during 1H09, followed by a buyout/merger at a substantially better valuation than the current share price.
2. An impressive FoB deal with a big-name partner—someone like NVS or TEVA or MYL rather than the kinds of obscure (to most US investors) companies that GTC has dealt with in the past.
3. A drastic change in the general investment environment wherein investors are once again paying up for high-risk, high-reward companies.
Of these outcomes, only #1 rates as likely, IMO. I consider #2 unlikely, though possible, because my sense is that interest from prospective partners in FoB deals has been put on hold until these prospective partners can gauge the legislative priorities of the new US Congress and administration.
I rate #3 the least likely of the three listed outcomes. There are only seven months until the 6/1/09 deadline for GTC to redeem the LFB loan (and thereby avert having it convert into equity), and I’d be surprised if the current risk-averse environment could change that quickly.
If none of the aforementioned outcomes occurs, it’s hard to see how existing shareholders end up with anything of consequence. JMHO, FWIW
“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”
