Biotech Values

[biomaven0]

Any development stage biotech has to raise money. They can do it by partnering (which means giving up upside in their product) or they can do it by selling equity (a few can sell convertible debt instead). By and large they will sell equity.

Now it's possible to sell equity at good prices, and it's possible to sell equity at bad prices. To yell "dilution" at any sale of equity is just simplistic. Sure there are pipes (and now registered directs) where existing shareholders get shafted by below-market pricing and hefty warrant coverage. Sure there are scam companies like CTIC (which I have made decent money shorting in my time) that seem magically able to sell seemingly infinite amounts of shares, but smart investors don't buy those stocks. There are also equity raises at prices close to market that sometimes end up benefiting existing shareholders - the recent raise by ZIOP is a good example.

On simple technical accounting grounds you are misusing the word "dilution." In accounting it has two meanings - book value dilution and dilution from common stock equivalents (as in "fully diluted"). It does not simply mean an increase in shares outstanding.

Peter