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Well, that’s just, like, your opinion... man.
Continue abiding, el duderino.
I’m not sure that’s the correct takeaway from Bored Lawyer’s post, but I’ll let them clarify at some point.
And regardless of the market assessment/valuation semantics, the value of the compound in the HIV or GvHD space is not changing rapidly. So again, why would that not be released when it was promised to investors weeks ago?
It was clarified at one point that this was never a true “valuation” - it was a market assessment. The assessment of HIV/GvHD shouldn’t be changing. So again... why have they not released it?
I have my opinion, which makes me curious to hear what other people think.
Why do you think they haven’t released the independent market assessment yet?
That’s probably what the subsidiary legal entity will actually be called. The NewCo, which will be the parent, will be CytoDyn Inc, and this is what you will own shares in eventually. As Bored Lawyer notes, this appears to just be corporate structuring to gain tax advantages, but there’s nothing nefarious or irregular. Holding companies are common practice in many industries. For example, if you own shares of Bank of America, you don’t actually own shares of the bank. Either of them, to be precise, since he holding company you hypothetically own shares in has two banking subsidiaries. You just own the holding company, which in turn wholly owns the (legal-ese named) banking subs.
There may be devils in the details of this agreement, but I don’t think it’s in the corporate structure.
I'd hardly consider that response as "substance".
I laid out the reasons why I believe a buyout could happen near-term, and also the reasons that I think most likely it will not happen near-term and instead the company will continue raising money as needed until it achieves substantial funding, likely in connection with closing the Prostagene deal. I detailed why I think a deal is unlikely now - maybe you didn't read that part... I'll give you the benefit of the doubt. I also discussed the reasons that I suspect are behind the lack of any partnerships previously. Guess you didn't read those either. If you consider a reasoned post to be "jumping from one foot* to the other" simply because I think that the most likely outcomes include events at very different** points in time, then I really can't help you. But as I thought, you're not actually interested in a discussion.
* I'm assuming that you meant "foot" and not "food". Unless you were using an oblique reference to jumping between hamburgers and hotdogs while binge eating at a Labor Day cookout. I can relate, but I've never heard the phrase used in polite conversation.
** Not really even that different in the scheme of things: post-P3 trial or post-approval. Not like I'm jumping from food to food saying they'll either be bought out during their first P1 or post-approval.
Adversary?
I thought I was relatively gracious. I suppose my first manager must have been correct... if anybody needs sensitivity training, it's probably me.
We're all well aware of your opinions here. If you feel like providing a substantive response to my post and having a discussion about it, that would be fine. Otherwise, give it a rest. Your opinion isn't annoying at face value, but your unimaginative repetitiveness got old a long time ago.
If you used all caps more often and occasionally threw out some words or acronyms that you didn't understand, I would just assume you were our old friend pearsby.
Of course not, but that's not apples to apples clearly. A more apt comparison would be to say that you're required to buy the house and clothes WITH the Ferrari, and the current market price suggests the Ferrari is worth the same as a '78 Pinto.
Regardless of however we choose to construct hypothetical analogs, the job of the market is to value the company - inclusive of the drug. The market currently says it's worth $120mm. Most of us disagree of course, and have our reasons for why we think it trades this low...
But the market still says it's worth $120mm.
I tend to agree. I think the ideal outcome would be for a BP to make a fair offer now, which would still be a big price tag, and to have CYDY let it go and let BP get it to market as fast as possible. At the end of the day, this drug needs to get to patients ASAP.
A fair offer (in my book) would still make most shareholders very, very happy. Biggest issue is the disconnect between our market cap and a "fair" price tag.
Simple: it works too well and covers too many indications. It's not a problem of "does the drug work" in my book, it's a problem of "who will pay what the company thinks it's worth?"
We're sitting at a market cap of $120mm. Let's say the company thinks that with all indications, it should be worth $18B (I'm making up numbers here, don't ask for justification of specifics) but would take $15B right now. I don't see any BP putting that kind of money into it because of the concentration risk for one deal - that's a huge chunk of change for an unapproved magic bullet that the market currently says is worth 1% or so of that.
At this point, I believe that CYDY is close enough to monetizing the asset (in my opinion) that they'd rather take (if necessary) less than ideal, dilutive funding to get it across the finish line themselves than to sell it for a more palatable price - say, $5B.
Once it's across the line for one indication - I think GvHD will be first - all bets are off. The company will be able to self-fund the remainder of the trials and get it to market more quickly for additional (expansion) indications. There's no need for a suitor at that point. Become your own BP. The cash will be there to build real infrastructure and acquire a complementary pipeline. If a BP wants it once something is across the finish line, they're going to absolutely pay through the nose.
That's why I think the likelihood of a buyout is either now or much later/never. The Prostagene deal likely is contingent on some funding coming through, although that's just my opinion. If they close the deal and get the funding they need, management is probably more likely to keep pushing for the full price tag or go it alone. However, they may be more willing to sell at a discount (although still a pretty hefty price tag, I would imagine) in conjunction with the closing of the deal to take any sort of risk off of the table. I'd call the chances of that unlikely, but nonzero. This may be last call for BP to belly up for a deal that everyone could live with.
As you might have surmised here, I'm very, very bullish. I'm just reading out I see the business side potentially playing out.
*Edit - not sure why the italics continued the entire way through, it was only supposed to cover "may". Not bothering to edit it though.
I strongly doubt that there will be any spin off or licensing for a particular platform. I’ve posed the question here several times, but nobody has taken the bait yet:
How do you protect exclusivity in the marketplace when more than one company owns the rights to the SAME molecule and SAME delivery system to treat DIFFERENT indications?
In my opinion, it’s a package deal and will not be split in any way. Unfortunately I think this makes a full-value buyout in the near future much less likely, but I also think that the future value is off the charts. I think we either see a big licensing/BO deal VERY soon (unlikely...) or we end up taking this down the road a ways ourselves, maybe all the way to market and never sell. I’m afraid (poor choice of words...) that with cancer, the price tag will be too big for most any BP to swallow.
I also think this “splitting” issue is why there has been no partnership on GvHD or HIV to date. Pretty sure it’ll be viewed as a partner across the board, or no deal. And that ends up being a rich deal for a BP to just be a partner.
I prefer bourbon, but tomato/tomahto...
I said nothing of the sort. All I did was interpret the mathematical inequality X + Y + Z <= 450mm.
Couple of things:
1) So far, nobody has confirmed the nature of the alleged raise with Paulson. I'm assuming that either the clients don't yet know, or (more likely) that would be considered protected/inside information under the NDA. So all of us who haven't signed an NDA are speculating on terms at this point...
2) The company wouldn't need to file with the SEC until after the raise is closed, so don't hold your breath there. As I recall, they have a shelf offering in place with plenty left on it.
3) If they're raising any sort of dilutive money through Paulson, that would limit the number of shares they could give Pestell. Fine by me - I've been assuming they'll max out the 450mm A/S eventually, and I'd rather the company get cash for a higher portion of those A/S not yet O/S, all else equal. If they're going to breach the 450mm, they'd have to either take it to shareholder vote (and likely get crucified by shareholders) or R/S (and definitely get crucified by shareholders, after Pourhassan's comments on the CC). Not speculating here on what Pestell is worth or will get, by the way.
4) One thing struck me as new/different with this alleged Paulson raise - the invite-only in-person meeting associated with it. Is this typical and I've just missed this information in the past? Or is this different? Maybe one of our resident Paulson clients can help me out with that insight.
Be careful. I don’t think you’re allowed to post here unless you’re making nonsensical references to athletes or musicals.
Nailed it.
I don’t have high hopes for this exact scenario, but don’t be shocked if a buyout occurs simultaneously with the merger being finalized. Price tag will go up if and once CYDY has the cash to go it alone. If Pestell can truly bring in the financing, I think some alarm bells will go off for BP’s. It’s much easier to be on the sidelines if CYDY doesn’t have the funding to bring it home.
Absolutely. It should be his dream scenario. Working on his research, with a drug of his choice, without the funding constraints of a startup.
It would be a no brainer. He’d make out like a bandit coming and going, PLUS be enabled to do his job to the fullest of his abilities.
I believe the reason we haven’t seen terms on the Prostagene deal yet is that it is contingent in some manner on what financing they can lock down. There is a chance, in my mind, that they could need to go to the well on less favorable terms to cover a short-term need while they finalize negotiations. A very small Paulson-style raise would validate this train of thought, in my mind.
Another interesting idea - although I don’t put much stock in it yet - is that if they were in a position to really get the knock out funding they need, then they would be in a position to go the distance alone. Right now, cash is the inhibitor, so if you remove that restriction... Particularly with the addition of cancer indications backed by a guy like Pestell, that may make the threat to some BP a little more real. Could be why we haven’t heard anything on financing, if you catch my drift.
But again, I don’t have a crystal ball. I just try to think things through to logical conclusions.
Thanks misiu, I went back and listened to the entire call. He doesn’t specifically mention a valuation of the company, but does explicitly say that the report addresses “market size and dynamics.” Pretty good analog for value, even if it doesn’t put a specific price tag on the firm, as I hope it will and wish it would.
With regard to the other conversation about financing and Paulson rumors, and not responding specifically to you misiu... who knows. Rumors on the board have definitely been confirmed before. There are many Paulson customers on here, some of whom have validated previous rumors by attesting that they had been contacted about funding rounds. That hasn’t happened here yet for this go round, but that doesn’t mean there’s no truth to the rumors. I don’t know. I do know that Pourhassan was exceptionally clear and passionate on the CC about the potential and likelihood of non-dilutive funding. We’ll see what those comments were worth in due time.
I’ll be happy if we get through after hours today with no 8k, but I’m not holding my breath.
Historically, you don’t release good news after hours or late in the week. I also expect to hear something early next week. What that something is? Your guess is as good as mine.
Interesting. Not questioning you, but my CC notes clearly say “hired a market research firm to evaluate the market size and dynamics.” I, and it seems most others, took this as an independent valuation exercise. I’d have to go back through the call to see if there were any other comments that made me think that. If this is not actually an independent valuation, then my comment may not apply as directly.
I would be pretty disappointed if we were misled into believing that there was an independent report of the value of the company coming soon when in fact there was not.
Deductive reasoning is your friend. Either it’s not great (not the case - they wouldn’t have mentioned it at the CC...) or they’re currently in discussions that preclude the release of the report. If you assume the report will reflect positively on the company versus current market cap, then the only reason not to release the report would be if they were precluded from doing so.
“Discussions” could be a range of things, as there are certainly plenty of moving parts at the moment. I don’t own a crystal ball and I’m not taking bets on what they’re working on, but I know they need money. And if they planned on selling shares, they would benefit from releasing an independent valuation suggesting that the current market cap is way too low.
There aren’t too many ways to connect those dots.
Did you miss the part where Pestell is already the CMO, prior to finalization of the acquisition? Or the part where he was on the conference call speaking as part of the management team?
You’re trying too hard here.
Saltz has gone dark from time to time in the past. Chump as well.
One could draw any range of assumptions here for the company, from the very best to the very worst. Personally, I assume it simply means that they have nothing to say at the moment.
All runs have pullbacks and consolidation. Let’s just be happy we’re not at $0.015 any more!
Although I’m pretty happy that I bought a bunch there.
No, it’s really not funny is it? Borderline criminal for the rare drug with a clean safety profile.
That would be great, but I seriously doubt they can functionally do that due to fact that the treatment for, for example, HIV and GvHD are literally the same compound and formulation. I’d like to hear more about it from the company, or a lawyer who knows this world, but I don’t see how anyone’s exclusivity could be sufficiently protected if you theoretically split up the indications. I also believe that this is why there’s no partnership to date. I believe the partner would want to be protected with some sort of profit share on all indications, or would have to front enough to be the exclusive partner for all indications. It’s another facet of the “holy grail” dilemma in my mind. Again, I’d absolutely love to get some truly educated perspective on those potential difficulties.
That said, I understand your point and it’s not unreasonable. I wouldn’t want to see them sell for $1B, for example. I would be quite disappointed by that.
A “reasonable” cost could mean different things to different people, no doubt.
Hate to say it, but I’d feel great about it. I’d make a boatload, you’d make a boatload, and most importantly... the drug would get to market far faster and more efficiently. Hand this off to GILD and it’s on the market 1H2019 for combo. We might not have in a BLA. That would be the right thing to do for the patients.
It’s an odd case... if all of the indications are effective, approved, adopted, etc., then the company basically has something worth so much that (almost) nobody could or would buy it! A bit of hyperbole here, but... how much do you sell the holy grail for? And then, who can buy it? And if they’re the only ones who can afford it, why would they pay you what it’s “worth” if nobody else could pay close to that?
I know BP’s throw around real money. I follow the market. But even if we got a “reasonable” valuation less than “full price for everything,” anyone holding this stock from this price point is going to make out very, very well.
Either way, neither of us are directors to the best of my knowledge, so I suppose we’ll get what we get when we get it! The rest is just speculation and hypothesizing.
I strongly suspect this to be the case as well. I think that, as investors, our greatest risk to making money on this company is the risk of management holding out for too much and missing the opportunity. Not saying that’s the case - I have no idea - but if that number is too high then nobody is going to pay it.
I imagine that an agreement acceptable to all parties will be met in due time. The principals and directors in the company have too much wealth tied up in shares to be unreasonable about the price, and too many BP’s could benefit here (see the list quietly provided in the 10k who play in the HIV space...) for someone not to make a very reasonable offer at some juncture.
The article was ridiculous. IF it hadn’t been a ridiculous article analyzing and commenting on actual results, I’d lean towards agreeing with you. As it is, the article may or may not have even done anything - it sensationalized what was already sensational news (at least in my opinion) regarding the outcomes of several late stage clinical trials. I’d wager that the stock moved much more on the trial results, particularly the mono update, than the article. No way to tell if course, but the simple fact that there WAS real news clears it of any P&D suspicion in my mind.
Regardless, you’re not an idiot even if I disagree with your take. And there’s no excuse for insults on the board. There’s no need for that, and I’m sorry that other folks here can’t act more civilized.
Very fair point...
I suspect that the delays were baked into the projections from the recent conference call as worst case scenario. As was pointed out, they should have about $1mm on the books right now. We’ll clearly hear something on financing soon out of necessity, and management must be aware of the gravity of delays due only to CMC. And aware that another $5mm doesn’t fix that issue.
We’ll see soon enough.
You and me both, since I’m quite long as well!
Spot on. Material funding is clearly paramount at this point. Hopefully we hear something sooner rather than later.
I agree that critical thinking is important, and we should all constantly evaluate our investments. For my part, I don’t think anything is truly being missed. I think we’re an OTC stock with headwinds from the capital structure, and the restrictions on OTC investment coupled with many private investors’ inherent skepticism of penny stocks are driving a wide disconnect between market cap and the potential value of the company. As to why BP hasn’t gotten involved, I can’t fathom that nobody has made a pass. Pourhassan made it very clear recently that if anyone offered them what they thought the company was worth then they’d sell it and be done. My guess is that that number is big, and they’d rather continue scrambling to advance the ball than sell or partner on terms that are less than fair to the company and its investors.
A pump and dump? Sorry, but that’s kind of ridiculous. Announcing positive phase three results for two separate trials (true, one is interim...) is hardly the stuff of pump and dump land. Just because the share price rose and then has subsequently pulled back does not make it a pump and dump. There are plenty of true P&D’s in the OTC realm. I can’t find another that’s tying up loose ends prior to filing a BLA.
Where does this end? How does the apparent disconnect get resolved? I don’t know. I suppose we’ll see eventually. Cooler heads just need to prevail, and see the facts for what they are. Separate the emotion, invest accordingly in line with your risk tolerance.
10k out. Must go read.
This is incorrect. The IDMC has already reviewed the first 10 patients, and they are recruiting 10 more. They loosened the requirements for the next 10 patients and are upping the dose. Pourhassan suggested the second cohort of 10 could be enrolled quickly. The FDA is going to review again after the next 10 (patients 11-20) complete 30 days post-treatment. He did suggest that if data was strong, they may not need to finish enrolling the trial.
Agreed. Haven't fully thought through what it may or may not mean for prospects here, but since cancer is a new focus... maybe it wouldn't hurt to have a premier oncologist, his IP, and a drug that he found promising enough to hitch his wagon to?
Just tea leaves. Obviously means nothing at this point. Interesting nonetheless.