Avid Bioservices Inc (CDMO)

[Protector]

massH, I cannot answer all your questions.

To some I am not sure what the exact answer is (e.g. can Eastern buy for another party? Yes I think but not in the quality they made this deal because they had to sign that they do NOT intend to use the shares to take control of PPHM and cannot guarantee that if another party will hold the shares. They could write it in a contract but that other party would NOT be liable to PPHM, only to EASTERN. Kind of Retailers->PPHM->CSM->JB but we can only shoot at PPHM and PPHM only at CSM and CSM at JB. But there could be other rules if Eastern makes a new product, basket, with PPHM in it and by coincidence it is one customer on the Cayman's that buys all baskets. It wouldn't even show PPHM in its books. So you see it depends on what Eastern is all licensed to do in the financial markets.

As for the deal itself:

1) If PPHM needs to raise 20Mil$ over the ATM in a short period of time (which means not at a monthly burning rate but MUCH faster) then the PPS drops big time. The deal prevents this and very probably PPHM has a BETTER price with 1.08$ then what they would have averaged to if using the ATM + paying fees/commissions. They pay some to VLC I geuss for this deal too.

2) Suppose EASTERN wanted the shares (meaning PPHM wasn't requesting and had no plans of its own to wheel in 20Mil$ very fast) then Eastern would have paid MORE then 1.08$ (I suspect THEY kept/brought the price down to be able to make this deal and PPHM will have seen the thread for there funding via ATM if Eastern didn't get what they wanted). At the open market Eastern would have raised the price. So they might have shorted it UPFRONT then made the deal and possibly dump a part of the new shares to close short positions (but that is speculation).

3) In ALL cases PPHM now has 20Mil$ to either stay away from the ATM for a long time OR to finance something for which they needed to money ASAP (E.g. AstraZeneca clinical trials and Breast PII/PIII). The liquidity has not changed because the shares come from PPHM's shelf directly to Eastern's shelf and are NOT in circulation, at least not for now.

4) Also in ALL cases Eastern now drastically increased its near 5% position to become a more important shareholder than Blackrock with its about 7%. And from Kenneth we know he supports the companies he believes in, also in the votes which is then an important alliance for PPHM. As you correctly assesed he doesn't invest money for PPHM's blue eyes, he needs to see return on investment and profit and in this type of deal there is ONLY ONE way to get that and that is a PPS higher the 1.08$. Luckily for us he is like ES and me, he will not go for 5 or 10$ and a simple x5 or x10. He is into HIGH LEVERAGE too.

5) As for the negotiated price. There are rules. Normally a price window is taken and one close or an average of closing prices is used (sometimes day averages). You do understand that if that was not the case we could all ask for the SAME deal because PPHM may not discriminate between shareholders. Ofcourse Easter has the pockets to bring the PPS up or down in a context of a strategy within that chosen window. Most retail shareholders can't.

6) The MARKET BLOCK of yesterday (keeping us from moving the National Best Bid to 1.12 and above) was bad luck if not fixed by some party by intend. It forced EVERY seller and shorter to come down below 1.1201$. For sellers not nice, for shorters risk because on the way to FILL short positions they run dry at 1.1151$ because the higher sellers cannot be reached and probably will not come down, certainly not if it are MM's. This might result in overnight open positions and brokers then insisting on lending fees plus the risk of a PR or SEC filing (as actually happened with the EASTERN stuff) and then a Monday open with a GAP-UP.

I don't know how the market will react to the EASTERN deal. Personally I see it as a positive because it is better then EASTERN buying into PPHM running the ATM which would have been kind of slow and neutral anyway. And also better then PPHM pressing on the PPS with 20Mil ATM. Furthermore it is yet another party that takes a big pcs of PPHM.

Finally I think that BP will again not like this because possibly they didn't anticipate PPHM to again get the funding without any encumberment of IP/Pipelines or weakening of their position by terms of loans. It also looks that whatever happens next PPHM has the cash now to run SUNRISE without ANY NEW funding. If we combine that with some End of Enrolment PR in the near future (before Year end) then actually the only remaining risk of this trial are the results BUT on those we have a good perspective thanks to the dose switching and related disclosures we would otherwise never have known.

I do not have the answer to according what procedure EASTERN may sell. Possibly it is in the terms. However we have seen that Ayer, after its PPHM deal of a few years ago, seemed to be quite unrestricted for the selling part.