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At this point, it appears GTC gave away half the alpha-1 antitrypsin program to keep LFB onboard. (The existing agreement provides that GTC and LFB share development costs and future revenues.)
A cost-cutting measure perhaps? OK, give us the other shoe.
>IMVHO the best fit for me is the intended partner was Pharming<
jesse,
I'm of the same opinion. I don't put much stock in coincidences, and there have been several "coincidences" in the past few months.
GTC was confident a deal would be done by the end of December. Pharming expected a positive opinion on Rhucin from the CHMP by the end of December. Neither happened.
Then, GTC guided toward a possible done deal in 1Q08. Pharming indicated they expected to prevail in their appeal of the CHIMP negative opinion in 1Q08. Neither happened. (Cox's "few weeks" prediction was voiced March 6th and Pharming received word their appeal failed on March 20th. Neither company has said anything since. Also, GTC's still unexplained sudden drop in pps from .70 to .45 took place during that period ... the drop Cox reacted to. That drop could have been the result of knowledge that the CHMP was not wavering, and therefore the deal was in critical condition.)
With the slide in Pharming's market cap since December, now with no anticipation of an early recovery, any possible deal would have gone back to square one, I would think ... if there indeed was a possible deal.
Maybe we will receive some clarity tomorrow, but I'm not holding my breath.
More musings
Since there is nothing else to talk about here are a couple of obversations in case someone may be interested, or in case someone else is just bored.
Yesterday the GTCB trading pattern was bizarre. Much of the time the spread between bid and ask was only .0001 cent. For a long while in the morning the bid was .6101 and the ask was .6102, with a trade of 100 shares at the bid about each minute. After several minutes there would be a trade or two at the ask (to reload maybe), and then the pattern would repeat. Discounting the final tape painting trade at .59, this went on almost all day.
I can think of no logical reason for that kind of activity unless someone was trading with himself (at practically no cost) for the purpose of pinning the pps. Why would someone do that? Possibly because there is some kind of deal coming that is share price dependent?
Which leads to the other obversation. A few days ago (April 30th I believe) the following was posted on Yahoo by "stocktradinggenius":
"Based on word of mouth, the current partnership negotiations are 95% complete and the deal should be signed/announced prior to the upcoming earnings release. There has been stickiness over the partner wanting to include a purchase price buyout clause in the agreement based on the success of the DIC trials. No specific numbers of deal size or purchase price were known. Will update when hear more."
I know nothing about "stocktradinggenius" except that he has been around for several years (going back to the GENR days so maybe Dew knows more) and his predictions about upcoming deals have been fairly accurate. He missed a couple (although there were deals in the works which did not pan out) but he hit one precisely in March ... to the point of predicting the exact buyout price.
Just something to muse about on a quiet Saturday.
Neither do I, but Yahoo Finance shows it to be May 8th.
http://biz.yahoo.com/research/earncal/20080508.html
>I would have thought that a stock message board is the last place for such a person, that you would have no worries, and that you would spend your time drinking wine and selecting your portfolio by tossing darts at a monkey, or maybe buying an index fund.<
We would all probably be better served in the long run by an index fund, but I prefer to do my own research, make my own decisions, and then take full responsibility for the results. To do that, I need information. Stock message boards are no doubt the worst place to search for reliable information, but this particular board is USUALLY the exception. (I tried tossing darts at a monkey, but after the first toss the monkey would not stand still. I even thought about naming the monkey "GTC", but decided against it because GTC is very good at standing still.)
I fully understand that the stock market (and the oil market, and even the supermarket) is influenced by greed, fear and fraud. That's just the way it is and should be factored into any decision.
I also understand that GTC has some intrinsic value but, at this time, it is only a farm and a herd of goats. (There's a market for land, cheese and cabrito ... and even a small market for Atryn in Europe.) That may change tomorrow. I sincerely hope it does, otherwise I would not be here, but until then please spare me the rationalizations and wishful thinking loaded with qualifiers like "if" and "when".
Just the facts, Maam.
I think fear (or at least extreme doubt) is the predominant emotion regarding GTC in today's market. Normally, we might expect a few facts from management to either allay or substantiate those fears, but management is suffering from a self-imposed lack of credibility.
<Why do you get worried? Are you afraid he will do something silly, like buy the stock, and this really concerns you?>
No. I get worried because I know the "intrinsic value" and "manipulation" BS is not far behind. Sure enough, here it comes.
When someone starts talking about a stock being "undervalued", I get worried.
The definition of "market value" is what a willing buyer and a willing seller agree to in an arm's length transaction. If you think GTC is "undervalued", what you're really saying is you don't agree with the pps set by the market.
I hate to be a wet blanket, but the market doesn't really care what you think ... unless of course you're willing to pay more than the current "market value". Put in a bid for what you think GTC is REALLY worth and see what happens.
In their 2006 Annual Report, Pharming said, "The FDA is currently reviewing the file and will likely give their opinion in the first half of 2007."
In their 2007 Annual Report, Pharming said the file was still under review by the FDA.
Maybe there will be an opinion "in a few weeks".
<In other words, do you think they still have hope that a partnership announcement may allow them to forgo asking for a Reverse Stock split with the Proxy mailing?>
That is quite a stretch. Putting a reverse split authorization on the agenda is akin to putting overdraft protection on your bank account. The authorization itself is just insurance and would hardly justify putting off the annual meeting a month.
It is probably safe to assume though that there is SOMETHING yet to be finalized that may/will require shareholder approval.
Or, maybe the original May date for the annual meeting interfered with Dr. Cox's annual trip to Monte Carlo (for the Rodman and Renshaw show).
We will know "in a few weeks" ... maybe, or maybe not. After all, this is GTC and nothing happens on time.
>Should GTC be evaluated like any other biotech, or should they be evaluated as a new platform for producting approved drugs at a lower price?<
GTC, not unlike any other company, will be evaluated on its potential to make a profit by whatever means ... if GTC remains a viable company. As of today, the jury is still out and the result is a nervous pps of 56 cents.
Simple as that.
Thank you, jesse, LRG, vin and flo, for the serious discussion. The silliness of the posts in the past few days was wearing pretty thin.
>The above is tantamount to saying that once a company’s share price falls due to problems with the business prospects it will never again rise.<
No, I am saying that is the case if the company does nothing to alleviate the problems which caused the fall. I fail to see how a reverse split per se will do anything to improve GTC's cash position.
>You’re not arguing against reverse splits, but rather against owning a stock where the share price has declined due to problems with the business prospects.<
That is quite a stretch.
What Thomas S. fails to acknowledge in his simplistic (and probably self-serving) theory is the underlying reason for a stock's pps falling below $1. The reason in the vast majority of cases ... and GTC is no exception ... is that the company is in some kind of trouble. The reverse split DOES NOT CHANGE that. If the company is in trouble before the reverse split, it will still be in the same trouble after the reverse split. As a result, the pps usually continues to fall ... just like it would have without the reverse split. The reverse split may save a listing, but more often than not even that is only temporary.
GTC's problem is not its share price. GTC's problem is a shortage of cash/cash flow. Fix that and the share price will take care of itself.
>To increase the Series D authorization above 15,000 shares (convertible into 15M shares of common), GTC would have to amend Article IV of the corporate charter with the Massachusetts Secretary of State. This might impose an unreasonable delay on the consummation of any deal that depended on such approval. By LFB’s converting preferred shares into common, this roadblock has been circumvented.<
Agreed, but it was done for LFB and it could be done for another party ... with LFB's approval. It would not require shareholder approval because the common shares to satisfy a sizable increase in Series D are already authorized. LFB may have facilitated some kind of deal, but other Series D could have been issued without LFB converting theirs. I suppose time will tell why they chose to do so. (Unless Massachusetts is radically different from other states, the process is the BOD amends the charter and then files the amendment with the Secretary of State ... not a big deal.)
>This possibility was discussed earlier in this thread, but it’s hard to believe LFB intends to dump shares at these prices.<
Agreed again. My comment was tongue-in-cheek. It is just as hard to believe management would issue any more Series D (replacement or otherwise) at these prices either. I hope they are not selling any more of the farm at bargain basement prices.
Dew, with all "dew" respect, these legal documents must be read in their entirety. Taking things out of context may lead to erroneous conclusions.
The 8-K of September 29,2006, clearly states there were 5,000,000 authorized shares of Preferred Stock before and after the date of filing. It also clearly states the action taken to designate 5,000 shares of that Preferred Stock to Class D Preferred was taken without shareholder approval and shareholder approval was not required. (Shareholder approval WAS required to increase the authorized shares of Common Stock from 100 million to 200 million, as was required to close the deal with LFB.)
Further, Exhibit 3.1 of the 8-K (Article 4.4) states:
>>(c) Separate Vote of Series D Preferred Stock . In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of not less than a majority of the then outstanding shares of Series D Preferred Stock consenting or voting (as the case may be) separately as a class:
(i) alter or change the rights, preferences or privileges of the Series D Preferred Stock, whether through merger, sale consolidation or otherwise;
(ii) alter or change the rights, preferences or privileges of any capital stock of the Corporation so as to affect adversely the rights of the Series D Preferred Stock, whether through merger, sale consolidation or otherwise;
(iii) issue any shares of Series D Preferred Stock, other than pursuant to the Purchase Agreement; and
(iv) increase the number of authorized shares of Series D Preferred Stock.<<
Note, "without first obtaining the affirmative vote or written consent ................"
The above leads me to believe that the BOD can authorize additional Series D Preferred about any time they please IF LFB approves.
I'm not trying to be argumentative, but I believe there may be other explanations for LFB's conversion. It may be as simple as they just want to lighten up some .... or lighten up a lot. We should know soon.
Here is the relevant section from the 8-K dated September 29, 2006.
"4.4.1. Authorized Amount and Designation . Fifteen thousand (15,000) shares of the authorized and unissued Preferred Stock of the Corporation are hereby designated “Series D Preferred Stock” with the rights, preferences, powers, privileges and restrictions, qualifications and limitations set forth below. Upon the conversion of any shares of Series D Preferred Stock or upon any other reacquisition of such shares by the Corporation, such shares shall be restored to the status of undesignated Preferred Stock. Upon any such conversion or reacquisition, the Board may, without action by the stockholders, authorize the amendment of this Section 4.4.1 either to reduce the number of shares of Preferred Stock designated as Series D Preferred Stock to reflect a partial conversion or reacquisition, or to eliminate this Section 4.4.1 to reflect the conversion or reacquisition of all outstanding shares of Series D Preferred Stock."
It appears the BOD will now have to take some action as to the disposition of LFB's converted Series D Preferred Stock, but it is difficult to say what that action will be. The operative words are "shall" and "may".
>>Moreover, it hardly makes sense for LFB to be thinking of selling shares at these prices.<<
Unless, there is an acquisition or merger in the works that would value existing shares at some premium, and the party (or paries) did not want LFB to have so large a stake in the surviving entity. In that case, LFB might agree to lighten up as a condition of the deal ... at better than today's prices.
Pharming is still in the wings. Pharming's cash and GTC's potential cash flow (and Nasdaq listing) might make a workable marriage. Moreover, Pharming's recent setbacks and GTC's delays in announcing a deal seem to coincide.
(This is ridiculous. I'm going back to bed.)
Don't the rules of the game change significantly when any party's ownership interest exceeds 20%?
At any rate, the thought of another 15 million shares at 57 cents is frightening.
Newly issued to someone other than LFB, so as to not disturb the 19.9% limitation?
Dew, I suppose we can hope GTC is the eventual recipient of this $5.8 million for advising PharmAthene in setting up its own goat farm.
>>ANNAPOLIS, Md., March 26 /PRNewswire-FirstCall/ -- PharmAthene, Inc., (Amex: PIP ) a biodefense company specializing in the development and commercialization of medical countermeasures against chemical and biological terrorism, announced today that it has been awarded a contract modification providing an additional value of $5.8 million for continued development of Protexia®, the Company's broad spectrum chemical nerve agent prophylaxis.<<
Otherwise, today's GTC PR appears to be nothing but fluff.
So, GTC will be done with PharmAthene in about six months ... at least for a few years (if Protexia is eventually approved)?
Dew,
>>The manufacturing work is planned to conclude in the third quarter of 2008.<<
Is this a poorly worded PR, or will GTCB's services be cut back shortly? (PharmAhene is moving, or has already moved, its goats to Maryland from Canada.)
Pharming signs distribution agreement for Rhucin in Turkey.
"Leiden, The Netherlands, March 25, 2008. Biotech company Pharming Group NV ("Pharming" or "the Company") (NYSE Euronext: PHARM) announced today that it has signed an exclusive licensing and distribution agreement with EIP Eczacibasi Ilaç Pazarlama A.S., (EIP) a leading Turkish pharmaceutical company for the marketing and sales of Rhucin® in Turkey. The agreement covers the use of Rhucin® to treat acute attacks of Hereditary Angioedema (HAE) with a right of first refusal to EIP for other indications.
EIP will be responsible for registration of the product in Turkey and has already taken the first steps in this process. Rhucin® may be eligible for an accelerated review procedure given the high medical need for new therapies in the HAE-patient community as a life threatening disease. Data submitted to the EMEA as well as additional data generated after the EMEA-submission will be used in the registration procedure, although the decision on registration in Turkey will be independent of decisions made in the EU or the USA. Under the terms of the agreement, EIP will purchase the product from Pharming and market, sell and distribute it in Turkey. EIP will also pay a license fee to Pharming for the product."
http://biz.yahoo.com/iw/080325/0378925.html
MNTA 11.41, -15% from November high.
A reverse split is a nothing more than a tourniquet. It may stop the bleeding for awhile, but does nothing for the underlying condition. Any case where the share price ultimately climbed was because the real problem was addressed subsequent to the reverse split. Conversely, ignore the real problem and the share price will sink right back to where it was prior to the reverse split.
The share price is NOT the problem! The share price is the result of the problem.
I tend to agree with vinmantoo.
>>Has anyone speculated on other means that are being developed to produce large quantifies of these complex proteins?>>
Ad nauseam. Why don't you spend a little time doing your own research by reading the material Dew has supplied in the "Read Me First"?
Somwhere along the line you got terribly lost.
<<Then for a drug currently under production, there are the sunk costs of the bioreactors already being used. If one is producing enough drugs with bioreactors, why switch?>>
In a nutshell, lower cost. The "biosimilar" would probably be produced by another company ... a competitor ... not the original manufacturer. After the original patent expired, if a competitor could produce the drug by an alternate method ... which would have to be approved ... at a lower cost, then the competitor could sell the drug for less and probably gain a large share ... possibly all ... of the market. If not, the competitor probably would not even try.
There is currently no way to get a "biosimilar" approved in the United States. Congress will have to pass enabling legislation and the FDA will have to adopt rules. That is expected to happen in a year or so.
As things stand today, your scenario makes no sense.
It would be refreshing if management just came out and explained what kind of game they are playing ... if there is a rational explanation ... instead of saying this, doing that, and generally looking like a bunch of stumblebums.
Thurly, The PharmAthene CEO said in a presentation last month that animal trials may begin this year. As to how the BChE occurs in the brain, there is some speculation that it may be through the spinal fluid. (I am also scientifically challenged, but that is what I surmise from the literature. Maybe someone else can shed some educated light on this subject.)
The PharmAthene presentation is still archived on their website, however the mention of Protexia for AD is only a few sentences toward the end of the presentation.
PharmAthene briefly mentioned this observation a few months ago, but this is the first follow-up I have seen ... and I have been looking. Good find!
This may have added to Dr. Cox's excitement re Protexia during the CC.
<Dew, why do you think they avoid doing a RS?>
Your question was addressed to Dew, but in the interest of full disclosure:
A RS may temporarily cure a delisting concern, but that does not fix the underlying problem that caused the pps to slip in the first place ... in this case a cash flow problem. Moreover, a long awaited partnership with single digit upfront will only put a bandaid on the bleeding. This company had better get serious about obtaining a firm financial footing ... and a RS is not the way to start.
A RS is usually perceived as a desperate act by a desperate company and the pps will usually be punished as soon as the RS is made public.
A RS is almost always a losing proposition.
Dew, Thanks for the good questions. EOM
From message #8383 (2/26/2008) by Dew Diligence:
<Auditors typically consider issuing such a qualification only once per year, when auditing the books at the end of the fiscal year. Hence there is no need to worry about such a qualification until the 2008 10K is prepared in early 2009. By then, I expect that GTC’s financial position will be better than it is now.>
However, my recall WAS wrong on the other point. You DID label Newberry's comment as propoganda. I stand corrected on that one point. I took your above statement as supporting Newberry's nonsense when someone took the position that the placement was to avoid a "going concern" qualification ... which it probably was, but failed.
<The “going concern” qualification is all but automatic if the cash on hand at the beginning of the fiscal year ($15.9M) less the expected cash burn for the fiscal year ($28M) is less than zero. This is presumably the reason GTC sought to raise $20M in February.>
This is a direct contradiction to either your, or Newberry's, or both, statements less than a month ago. At that time you said no "going concern" qualification would be required prior to 2009, and the reason GTC sought funds was to improve their negotiating position.
<If GTC gets an up-front amount from the US partnership in line with prior guidance, they will be OK for all of 2008 in terms of covering operating costs. Of course, they will need to raise money for 2009 unless there are further positive developments this year.>
How many times has "prior guidance" been anything other than wishful thinking ... or simply spin?
The only positive reason I can see for a RS would to adjust the share price to accomodate a merger of some sort.
For example, a 1:3 RS would put GTCB pps at approximately $1.80 based on today's close. Coincidentally, PHARM.AS pps closed today at approximately 1.20 euros = approximately $1.80. If a proposal is forthcoming for shareholder approval, it could very well be predicated on today's closing pps for both stocks ... and word could leak.
I am not suggesting this is the case, but it is an example.
<GTC originally sought $20M (gross) from the February financing, but this does not necessarily imply that they will seek to get the “other” $14M ASAP.>
Moreover, the recent placement apparently prohibits further dilution until after May 12th ... 90 days following the Feb 12th closing. From 8-K:
"4.12 Subsequent Equity Sales .
(a) From the date hereof until 90 days after the Closing Date, neither the Company nor the Subsidiary shall issue shares of Common Stock or Common Stock Equivalents; provided, however, that such period shall be reduced to 45 days after the Closing Date if on any Trading Day thereafter the last sale price of the Company’s Common Stock during normal trading hours, as reported, is at least $0.90 per share. Notwithstanding anything to the contrary, the applicable restriction period set forth in this Section 4.12(a) shall be extended for the number of Trading Days during such period in which trading in the Common Stock is suspended by any Trading Market."
<In my opinion, a reverse split is a non-issue insofar as it does not change anyone’s equity stake. It may even be a good thing if it helps the stock stay on the NasdaqGM. In any case, putting a reverse split to a shareholder vote is hardly the kind of action that justifies a major sell-off. If this is in fact the only impetus for today’s price action, I’ll be very pleased.>
You are NOT that naive!
Related, from Pharming's 2007 Annual Report released February 15th:
"In interactions with the FDA throughout 2007, no questions appeared to be outstanding with regard to the use of human lactoferrin in nutritional products. The GRAS-notification has been reviewed by an independent scientific expert panel who agreed that hLF is safe for its intended uses. Although Pharming had expected to receive a decision from the FDA in 2007, it is still hopeful that the agency will accept Pharming’s notification in the near future."
Pharming has solidified its position in the production of human lactoferin. All they need now is FDA notification of GRAS.
It seems Pharming and GTCB both experienced unexpected delays toward the end of 2007. GTCB's anticipated partner agreement and HD trial completion did not materialize. Pharming did not receive the GRAS notification, but did receive a negative opinion from the CHMP regarding Rhucin ... which has been appealed. However, both GTCB and Pharming expect to have the delays worked out "in the not too distant future" and "in the near future", respectively.
That would be nice.
Dew,
If and when the smoke clears do you expect a U.S. partner for ATryn to get about the same deal as LEO ... $73 million in milestones and 15% of end-user sales to GTC? (msg #32266)
The cost/risk/reward appears to be about equal (if the U.S. partner picks up GTC's half of the AD Phase III costs and GTC is responsible for completing the FDA HD approval).
If you read the last sentence or two beginning with, "Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment ........", you will find a loophole large enough to drive a truck through.