I don't set much stock in any of that either, but if what's under negotiation is an RD deal, you have to wonder what's left to iron out after over a year since POC, and active negotiations at least since September (I don't think the "30-45 days" comment was a complete figment of Varney's imagination).

Varney needs to get something done soon; if he thinks the people he's in talks with aren't serious, he will likely pull the plug. For their part, anybody negotiating with cor knows that if a deal doesn't get done, Samyang will own ~25% of cor.

All this leads me to believe that a deal will be done by end of Q1, irrespective of what the grapevine says.

I consider it important that Samyang has tied up a substantial number of cor shares. This makes any kind of R&R-engineered forced sale of the IP considerably more complicated.

The strategy of stringing cor along so as to drive down share-price, and eventually force a liquidation appears riskier now. Samyang may potentially hold more cor shares than anybody out there.

The big unknown for me is whether the company cor has been in negotiations with for an RD (or whatever) partnership is actually serious. If they are, it's not clear to me that it's in their interest to drag this process out further.

The march date that's been floated may reflect the projected completion date of the SA trial, which might be part of the deal under negotiation. I hope not, first because I am doubtful that the SA trial is going to show efficacy, and second because cor no longer has the luxury of any slippage whatsoever, and based on cor's track record, slippage is to be expected.

If the outlicencing negotiations were not carried out in good faith, cor is still in big trouble. Their best shot is SA; if that fails, it's not clear what their options are.

That's very good news. Given both the pre-clinical and POC data, it's always struck me as incomprehensible that no-one seemed to recognize the value of cor's IP, particularly at these prices. It's a sad commentary on US corporate leadership that a Korean company is going to be the beneficiary.

I think their goal here is to minimize Samyang's potential stake in cor. Samyang's position in cor was determnined by yesterday's closing price: the higher the price, the fewer the shares.

Insofar as Samyang wants to maximize their stake in cor, they may drive down the pps near the April conversion date so that their purchase price is no higher than yesterday's close, since they will have to pay whichever of the two is greater. This period might be a good buying opportunity for anyone who wants to sell on any upcoming pop in shareprice.

I am reasonably optimistic about a deal getting done now, because the upside associated with stringing cor along has been reduced. If cor goes belly-up, Samyang is in a good position to take control of the IP.

I feel like cor has regained some leverage. Their IP is good; there may be a way out of this mess.

Varney, Stoll et al. want to get rich off cor, not collect a salary for another year. They could have easily negotiated a year's salary as part of a company sale, and saved themselves a lot of aggravation.

They want to be able to cash in their stock options. Whether they will have the luck and skill to pull it off, we'll see, but it's less of a pipe-dream now than it was yesterday.

I'm surprised that some of the other longs (JerryDylan, RBlatch) haven't weighed in here.

By giving Samyang such a big stake in the company, the incentive to string cor along with a bogus partnership negotiation, with the ultimate goal of scooping up the IP is no longer in place. If a deal isn't done, cor will shareprice will drift downward, and Samyang walks off with the IP.

Also cor management's interests are in alignment with shareholders again: the higher the shareprice at the time of conversion, the smaller the stake Samyang will ultimately have.

the note immediately before the one you brought back (from one Biomaven)isn't quite as pessimistic:

Even if this one has a floor, the floor is only going to drop on subsequent financings. They need to get something done, soon.

The terms do look good, but more importantly, my sense is that R&R isn't involved.
Bringing another entity with deep pockets may strengthen cor's position, since it effectively reduces the percentage of shares held by any one stakeholder. If any entity was seeking to gain control of the IP via stock accumulation, this deal is perhaps a setback.

my condolences

If all this is actually true, how long can cor go without actually disclosing the transaction? Are they going to wait until after trading hours? What's the point?

My bad:
http://www.earthtimes.org/articles/show/cortex-announces-15-million-private-placement,1122243.shtml

It's not on their website yet though.

the jig is down for R&R

There goes $0.15

I think "samyangoptikseu" = Samyang Optics, which is part of the bigger Samyang conglomerate/chaebol.

Google advanced search feature on Cortex Pharmaceutical, using the constraint "last 24 hours", then machine translation.

The market hasn't responded at all yet. If this is legit, I'd expect a bounce from $0.10.

Let's hope that with this money they can get something done.

PS. It's Korean

I think I found evidence of a $1.5M cash influx to cor at this link:


http://stock.kr.msn.com/msn/search/enterprise/view.asp?fSeq=001934&fDataDay=20100115&searchStr=%BB%EF%BE%E7%BF%C9%C6%BD%BD%BA&stockCode=KR7008080004&sTitle=%28%C1%D6%29%BB%EF%BE%E7%BF%C9%C6%BD%BD%BA%20%B1%E2%C5%B8%20%C1%D6%BF%E4%B0%E6%BF%B5%BB%E7%C7%D7%28%C0%DA%C0%B2%B0%F8%BD%C3%29


Google's translation gives this:

(Day) samyangoptikseu other key business information (Voluntary Disclosure) ??? Date 2010.01.15 January 15, 2010
?? More ?????/008080 Samyangoptikseu / 008080
?? ??????(????) Other key management information (Voluntary Disclosure)
1. 1. ?? Title ??????? Cortex Pharmaceuticals Inc. U.S. biotech companies Cortex Pharmaceuticals Inc. ?? Convertible Promissory Note(??????) USD$1,500,000 ???? Issue Convertible Promissory Note (promissory note conversion) USD $ 1,500,000 Purchase Agreement
2. 2. ???? Primary information 1. 1. ?? ?????? Cortex Pharmaceuticals Inc.? ???? Convertible Promissory Note(??????) USD$1,500,000 ?? American Bio-entrepreneurs Cortex Pharmaceuticals Inc. Issued Convertible Promissory Note (promissory note conversion) USD $ 1,500,000 Purchase
2. 2. ?? 1? / ??? 6% 1 years maturity, 6 percent annual interest rate
3. 3. ?????? 3?? ??? ????? ?? Conversion right is after 3 months from date of event
4. 4. ????? ??? ?? ???? ??????, ????? 40%? ???? Warrants? ??. If you hold until maturity are automatically converted into shares, equivalent to 40% of shares switch receives the Warrants.
5. 5. ????? ?????? ? ?? ??? ? ?? 5?? ??? ????? ??? 85% ???? ?? Conversion value or the conversion right haengsail ago due five days before last closing price of 85% of the amount applied gajungpyeonggyunhan
3. 3. ??(??)?? Decision (OK) Date 2010-01-15 2010-01-15
4. 4. ?? ????? ??? ?? Others refer to the information for trading - 2009.12.31 ?? Cortex Pharmaceuticals Inc.? ??????? 68,412,618??, 2010.01.14? ??? $0.1?. - December 31, 2009 Current Cortex Pharmaceuticals Inc. Chongbalhaeng of 68,412,618 shares which is close to $ 0.1 Lim January 14, 2010 1.
- ???? 2010.01.15 ?? - One of the transfer will be January 15, 2010

If this is accurate, it looks like they've gotten out from under R&R. I hope that this will undermine R&R's efforts to liquidate cor, since now this new entity might walk away the big winner.

I'd be very surprised if we stayed in this holding pattern through Jan let alone Feb. Something has to give. No matter how you cut it, they're broke.

Apart from that, who knows?

There's always been the pun Stoll --> stole. I've long been haunted by Varney --> war nie, German for "never was".

Nobody's buying or selling. I think we are done here.

>>The potential outcomes remain the same:
An onerous financing followed by a partnership.
OR, if the partner really is just playing with them:
An onerous financing followed by a sale of the company.


I think that what is more likely is a slap-dash liquidation of the company -- no financing required, because the low price will offset the risks associated with truncated due dilligence.

I don't think cor management has the credibility to get a counterparty to offer them a loan to get through the M/A process. If they had the credibility to do that, they'd have done a financing by now. They'll just have to let the whole thing go at a heinous discount.

To pass the time during this depressing wake, here's an interesting article about a novel class of cognitive enhancers (PDE4 allosteric modulators). This line of research may account for why there is reduced interest in ampakines among BPs. The article also reveals that the companies that did the ground-breaking work that allowed for the development of this new class of compounds have mostly all gone belly-up.

http://neuroethicscanada.wordpress.com/2010/01/12/major-step-forward-in-developing-real-pharmacological-cognitive-enhancers/

Is there a precedent for this kind of thing? Is there are real risk that cor will be unable to secure financing without loosing control of the company? If they can't raise funds, what do you foresee?

I understand that predictions invite insults here. Without assigning probabilities, can you indicate what the possible outcomes might be?

Here's a little tidbit from a review of the biotech sector that came out today at
http://finance.yahoo.com/news/Uncertainty-Breeds-twst-3572311088.html?x=0

The focus is on Cephalon, which for a long time I considered a strong partnership candidate for cor. Given where we are now, this optimism appears to have been misplaced.

Mr. Amsellem: Another one that I'd point to and sort of a deep value idea is Cephalon, CEPH is the ticker. This is the case of a company that is trading at a very low multiple - nine times 2010 earnings. It's a stock that's really been beaten up, a real underperformer, and it's a classic case of investors being very concerned about the patents on its existing products. Yes, there are major patent uncertainties, but what I think is being overlooked is that the company has made numerous investments in its R&D pipeline and has actually stockpiled a deep pipeline of products that are mainly focused on cancer, immunology and pain management.

What's interesting about that is you have a company here that has some uncertainties regarding its intellectual property but actually does have the sensible IP. So at these depressed levels, you have a cash-flow positive business, a pretty low multiple. I think your risk-reward is favorable, and what I like about Cephalon is this is a company that, I think, has done things the right way. They have made investments in novel assets, new chemical entities - in some cases biologics for difficult-to-treat diseases - but they have taken R&D risk, and then they have legitimately made an effort to build a sustainable business of novel drugs that address unmet medical needs.

Many specialty pharma companies have mainly focused on me-too drugs or tried to focus on extended-release versions of existing molecules, or just tried to slightly improve existing chemical entities, really without making any advances in terms of addressing unmet medical needs. Cephalon is actually doing that. Yes, that entails significant R&D risk, but I think that this is the kind of company that will eventually get credit for those efforts as the pipeline bears fruit.

Cortex has no good choices: it can raise capital on terms that potentially gives the buyer of shares control of the company, or it can sell the company in a situation where the buyer knows that cor can't raise capital to continue operations.

In the worst case, nobody's interested in obtaining shares of cor, at any price, and nobody's interested in buying out cor's IP. I consider this unlikely, but don't know enough about what other IP is out there.

By week's end, something has to move. They're broke now.

If the only entity interested in doing the financing is R&R, I don't think cor can do it. They'd be giving the company away.

Redundancy isn't a good option for microcap biotech.

All this is doable, particularly in the context of the FDA's own request for development of treatment for this condition.

I don't consider the RD study all that early-stage. That's a bet I can't understand some entity not taking.

If they're negotiating the loan with a gonif other than R&R, won't these two entities be at opposite ends of the deal? If gonif 2 gets everything absent a partnership then R&R is going to be quite motivated to see the partnership happen.

>>he frustration I sensed from MV is that they feel it's more or less a done deal without a for sure closing date.

The problem is that they have no leverage, and as this drags on, their position only weakens. A 1-2MM financing will buy them a few months. At what point do they get serious about plan B? If they don't use the financing to begin M/A or sale negotiations, they will be owned by R&R or their creditors, who will walk off with the IP.

This is their last all-in hand. I'm not sure they're wrong, but if this goes against them, we're done.

I'm sorry I muddied my question with editorializing. What I want to get a sense of is whether the absence of a financing in the nearly six weeks between the share increase in late November and now can be interpreted as evidence that cor may not be able to raise funds via a PIPE.

Compared to partnership or M/A, a financing would appear to be simpler, and easier to accomplish in a relatively short period of time.

They set the table for a financing at the end of November. Arguably, both M/A or partnership would require the time that a small financing would buy. In light of this, isn't the fact that they haven't yet managed to do a financing an indicator that they have been unable to find a partner even for a financing?

It looks to me that R&R wants to force a sale, and no one else is willing to step up and take their place.

People have been bad-mouthing R&R here for some time. As time goes on, I think that this demonization is misplaced: they are no worse than a pawn-broker, and they provide small companies access to capital. Back in 2007, they were pushing cor management to sell. In retrospect, we all would be better off if Stoll had followed their advice.

Cor is in the soup in part because of things out of their control, but also because their business model was flawed. They were undercapitalized for the kind of clinical development they undertook, and needed to partner earlier, at less favorable terms. They didn't do this, and now they (and us longs) are trapped, with the only way out a liquidation of the IP at bargain-basement prices.

Congratulations. I bet it felt good to put this thing behind you.

>>> R+R wants to broker the sale of Cortex to one of their vulture friends, probably the entity(s) who was buying up the BAM supply in the May to Sept period.

Doesn't this imply that there is a floor at $0.20, or are you just suggesting that these entities, who now control (say) 20% of cor, will negotiate for what's left for them to be majority stakeholders at some bargain-basement price, take the company private, and sell it?

I want to know how the people who are controlling this thing now are going to make their money.

>>These guys haven't bothered to communicate in any meaningfull way with shareholders for so long, they obviously have no intention of doing so.

I don't fault them with a failure to communicate now. There is no way they can. I do fault them with making projections that weren't realized. Given how rarely people in their position can actually say anything substantive, to make claims that ultimately are found to be false destroys their credibility, and their ability to communicate.

If Varney announced that cor was very close to closing a deal with another company, would you believe him?

>>>I rarely put so much of my time and attention, not to mention my money, into something I know very little about.

My mistake was to place focus on what I did understand (namely the science), at the expense of all the other factors essential for success. The problem with knowledge is that it can lead to a blindness just as crippling as ignorance.

I have learned an aversion to risk, and regret this lesson. All risks are on one level or other stupid, but the risks are forgiven if things work out, and when smart risks are taken the payoff is big, and life-expanding. Caution ensures survival but little else.

We'll see where this thing goes. Without money, the story will have to come to a close pretty soon one way or other.

Does anyone have an idea about whether cor is still trying for a PIPE? Can they reasonably expect to find takers? What is the payoff here for R&R, not to mention the entity/entities that bought heavily this summer at ~$0.20? Are they just as stupid as we are?

How badly can cor management screw up the endgame? Aren't all parties here going to work together to put this thing to bed on the best terms possible? Is there a chance that R&R gets a kickback from a BP for crushing share-price, thereby delivering the IP at a rock-bottom price? Is there a decoupling between what's best for R&R and what's best for the rest of us?

My sense is that wherever they're at with the SA trial, they've got to have looked at the data, since they've run out of funds to carry it forward, and a positive result would alter the deal-making landscape.

Based on this, the lack of any news on SA suggests that the trial has generated an ambiguous/negative result. Does this sound reasonable?

Does R&R make their money based on the share-price at the time of the sale, or via other mechanisms where the lower the sale price, the higher the reward to them?

So what happens now? We're within a month of cor being completely broke, and it's not clear that they can get bridge funds. My concern is that cor management never seriously entertained M/A as a fall-back option, and now that it is emerging as their only option, they will have to liquidate in haste, because they don't have the funds left to pay rent and utilities, let alone salaries.

I expect that over the course of 2010, this story will be over. I hope we all move forward to better things in the year ahead.

It's one of the ironies of this end-game that most of the people who post most frequently here now are people with no financial stake in the company (gfp, ombow, iggs), just lots of time on their hands, and no hobbies.

Happy holidays to everybody, and may we all overcome our unhealthy and unproductive obsessions.

Thanks for digging deeper than I did. At worst, they're getting close to completion.

The first site I provided a link to is a database of clinical trials in the UK, designed to attract enrolees. This site shows the SA trial as "enrolling". The BB I provided a link to had a post referencing the SA trial that was dated 11/23. From this I inferred that the trial was still enrolling.