Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
This urgent financing is inconsistent with the usual snail pace of everything biotech. No IND info, no CX 701 report, no, or regularly delayed, FDA feedback, no conference call as of yet, no BP deal. All time frames seem to be extended, until we get to this financing. The earnings report mentioned having cash on hand into 2008. A rush for an in-licensing? If so, also inconsistent with this industry's pace and probably a dangerous choice based on the impulsive chain of events.
Did R&R and institutional investors from the previous financing do extemely well with those terms? Warrants at 1.66, stock more than doubled? Does R&R have Cortex wrapped around their thumbs? There does seem to be some impropriety here. I think I will step back now until we know more. Let's see if any of this damage can be repaired.
So many questions, yet no answers.
I don't think you can read BP interest one way or the other from this deal.
At this point, without any communication from the company as to "why now", I think anything is possible. With the size, discount, and freebies associated with this deal, it stands to reason that nothing is even in the ball park with BP negotiations. What is the warrant and share price discount costing Cor in real money? $15 mill?
I'm just reasoning here. Again, maybe future events will prove this financing to be very lucrative, but optimism is waning.
Picking between BP and R&R seems like going to bed with a sugar daddy or going to bed with a loan shark. As a Cor investor pre-financing, I think the sugar daddy BP would be a hands down winner, night vs. day, compared to the loan shark. For one, the sugar daddy just wants their prey (Cortex/drugs), and the loan shark will go after the whole family (as in us, the individual investors).
A less than stellar BP deal might have been more favorable than sleeping with these vultures. But that is assuming their is significant BP interest, which the terms dictate there isn't.
Roger needs better financial counsel--and better institutional investors.
Perhaps more common sense and integrity also
There was some discussion, but very little, on the unusual timing (during market hours) of the announcement. Anyone have an opinion/hypothesis on why it was done after market opened?
You know what they say; lucky in love or lucky in money. I hope you have a good woman/kids to spend your life with.
Press Release Source: Vermillion, Inc.
Vermillion (Formerly Ciphergen) Announces $20.5 Million Private Placement of Common Stock
Friday August 24, 8:43 am ET
- Company Conference Call Originally Scheduled for 9:00 a.m. Eastern Time Today to Be Rescheduled After Private Placement Closes -
FREMONT, Calif., Aug. 24 /PRNewswire-FirstCall/ -- Vermillion, Inc., formerly Ciphergen Biosystems, Inc. (Nasdaq: CIPH - News), today announced that it has entered into securities purchase agreements in connection with a private placement with a group of existing and new investors. Under the terms of the agreement, Vermillion will receive approximately $20.5 million in gross proceeds from the sale of approximately 24.4 million shares of its common stock and the issuance of warrants for the purchase of approximately 19.5 million additional shares of Vermillion's common stock with an exercise price of $0.925 per share.
This deal looks ugly. This will ultimately double the outstanding shares. The front end looks much better though (than Cor), it represents a premium to the share price closing the day before. And they are probably much more desperate.
Making a deal with a 25% haircut to existing shareholders should be against the law. These "priviledged" deals are what sets people off, creates ill will etc., and rightfully so. Are we, the shareholders, raising our hands to get screwed out of our money. Of course not, but that is the impression I get from this, judging by their actions.
In the future, we will be able to re-evaluate the timing of this financing with a clearer perspective, but for now it does seem to be in poor taste. I would hope there is a very good reason they chose not to do the financing after the IND filing for ADHD.
Belated common courtesy tells me the announcement for a CC should be Monday morning with the CC taking place Tuesday morning.
Iggs-I too, or at least did, like the Stoll inlicensing bravado. But everything seems to go back to bad timing.
Was this financing approach a bad decision, bad luck, or a temporary set back only to prove fortuitous? I guess we will find out at a later date. But a little turn around would be nice, and communication would be a good way to start.
neuro:
1.) Couldn't Cortex be raising a PIPE now in order to have cash on the balance sheet when they negotiate a potential partnership? (to put them in a position of strength) I would think that they might raise cash now to get it out of the way.
2.) If this price erosion is due to a PIPE, what do you think they would need to raise? What do you think will happen to SP in reaction? I think the current price level inmplies a 15MM pipe..
3.) If the Co. is going to get an inlicensing deal done, they might need $$$ in excess of what is on the BS? What are your thoughts? Is there a candidate that you think would be a good fit? Do you think they could structure a deal that increases Shareholder Value?
4.) Why do you feel that a Pipe woulb be indefensible? I estimate that they have 5MM or so on the BS? (not very much to deliver on a partnership...etc...etc.. and they did say they would work toward an inlicensing.)
5.) Last PIPE was small but done at a terrible time. What do you think is causing this protracted drop if not a PIPE?
Thanks Neuro. I would truly like your opinion on these points.
Iggs
Very accurate (regarding the bold print).
Obviously, there are two very different perspectives regarding negotiating with BP from a point of financial strength; one is from the small/individual investor (on the outside looking in), and the other from the view of the insider. I guess things get more complicated and superficial when running a company. It's an image, smoke and mirrors and so on. I don't envy that position. I am perfectly content in this broken cocoon. Or am I?
Neuro: These levels are insane. I bet that we see 1.86 again. (Not sure if you are out there Neuro, but this looks and feels like a PIPE to me. Any thoughts??) Ever since this name has lost support in the 2.80's I have had a gnawing feeling that something is causing this sell off outside of the general market. I could understand the need to raise cash as a hedge now but I doubt they would raise enough cash through a PIPE at this time to warrant these price levels?? Who the heck is selling in the 2.20 -2.30 range?
Any opinions?
Iggs
Quite prescient. Who are you?
I agree with JimHaynes about the idea of raising money to negotiate with BP from a point of strength. Their is something flawed with that mentality. It may occur, but it is a lame concept which defies logic.
If you have something that 8 other people want, why would you dilute yourself? Isn't it the BP's who have been painted as being desperate (i.e. diminishing pipelines and patent losses). Granted, they have the size (or rather, ego), and money, but the tables become turned with multiple BP interest.
With multi-billion dollar product potential and competitive interest from qualified and cash rich BP's, how much low-balling could there be? The negotiating strength for Cortex comes from having something that BP wants and needs, not from making less than favorable financial arrangements at the expense of loyal investors.
I hope their is a good reason for the financing now. I just don't think negotiating with BP from a short term financial point of strength is one of them. If they decided to say "screw the low-balling, arrogant BP rep's and their self-serving goals, we have to move forward on our own to advance CX 717 and others," then I can understand the timing.
There may very well be a good explanation, but they failed to give us any indication of one. Couldn't the news release have been balanced with something positive or specific as far as the reason? What about a simultaneous announcement of CC to further explain. That would have been considerate.
Nice philosophy, unfortunately, in the real world, situations are not always that predictable.
Well, what can be said? Nobody likes to get blind-sided or victimized by the dark reality of capitalism...greed and desperation.
The perception here is that Cortex was desperate and the Piper's are greedy. The terms certainly suck, especially since Cortex seemed on the brink of some wonderful progress.
As I sit here feeling powerless and victimized as an investor of Cortex, I try fleetingly to look for a bright spot. The one I was able to come up with is this: When I was checking quotes with the Ameritrade automated quote system, I was stunney to hear the quote under $2 per share. My fear was that the FDA shot down CX 717. There was some relief when I was able to get to a computer and check the news.
We gotta just hang in there
Haysaw
He's (Lynch) out there, figuratively and perhaps literally. The part of the story where he was giggling at shorting Memory Pharma's stock was funny, in a mad scientist sort of way. Perhaps he is "out there" lurking on this board and others. Maybe he is contributing under an anonymous ID. Why not? If the Whole Foods CEO does, makes you wonder how many high level persons do.
What's up Doc?
5. A 2010 buyout at 30 dollars a share, or 2.29 billion dollar market-cap value, a premium of about 30 percent and prior to FDA approval.
Davidal-you're looking at roughly
2/3rds of a Youtube size buy out. That sounds like a mid-size level of satisfaction. Any buy out scenario would bring some degree of happiness. Heck, any value north of $3 per share would bring some happiness to me :=/}
Waiting anxiously for something from Cortex-
Haysaw
The next news will be the announcement of a conference call :=)
Visium has over 2 million shares of Northfield Labs (10% owner) and also over 2 million shares of Ista Pharmaceuticals (also in Irvine). They are in need of a big winner, looks like they were in Northfield Labs at much higher prices and still holding their shares with the stock at 1.20 ps.
A finance search of Visium (two news events):
Aug. 15th-
As part of business changes, Zila restructured its $12 million convertible debt note, held by its two largest investors, Visium Asset Management and Balyasny Asset Management. The note was amended, removing restrictive covenants, which frees up additional working capital and preserves cash by providing Zila with the option to make interest payments on the note with cash or stock. Zila also repurchased 932,832 shares of common stock from Visium funds at $1.34 per share, as well as 227,270 warrants valued at 66 cents per warrant.
Aug. 7th-
NPS has entered into the following three transactions, the proceeds of which will be used to retire all of the company's 2008 convertible debt.
-- NPS has issued $100 million in Series B Sensipar® royalty-backed
notes. The notes are non-recourse to NPS, bear an interest rate of
15.5% and will be repaid only after the Series A Sensipar royalty-
backed notes are paid in full. The Series B notes mature March 2017.
However, based on third-party forecasts of Sensipar sales, NPS expects
the royalty payments will be sufficient to repay the Series B notes by
December 2012 after which the Sensipar royalties will return to NPS.
-- NPS has issued $50 million in convertible notes to funds managed by
Visium Asset Management, LLC. These notes will be convertible into NPS
common stock at a conversion price of $5.44 per share (reflecting a
premium of 30%, relative to the five-day volume-weighted average price
for NPS common stock between July 31 and August 6, 2007), mature in
2014 and bear interest at a rate of 5.75% per annum.
-- NPS sold its royalty entitlement from European sales of Preotact by
Nycomed for $75 million paid as $50 million up front with another $25
million payable in 2010 if certain sales milestones are achieved. This
transaction was with Drug Royalty L.P. 3.
apparently, reading more than the headlines, much less a 4 part, 50 + page article, is not an activity practiced by the masses.
You are on to something:
Associated Press-Ipsos released new poll according to which 1 in 4 U.S. adults read no books at all in the past year
Dr. Lynch holds a B.A. in Psychology from the University of Delaware.
Wow! A fellow Blue Hen! He's got fightin' in his blood.
The article was excellent and the subject is intriguing (the brain, Lynch and his work). I admire Lynch's intellect, passion, rebellious nature, and collegiate choices. Now, if the rest of the world could help unlock this potential goldmine, we can posit our own TOE (theory on everything).
Btw, regarding buy out discussions-which would you rather be?:
1)Myspace (bought for approx. 600 mill)
2)Youtube (over 3 bill)
3)Microsoft
Positive weekend observation: Cortex shareholders are back to where they started for the week, the Nasdaq is not.
Btw-Isn't Maria flying around the world on a Citibank private jet with an executive? I heard that a while back. There must have been some concern, due to the personal use nature of the company jet. If Cortex hired her, she wouldn't be cheap. Time for more executive options rewards :=)
Frankly, whatever!
dumb money is selling - as evidenced by the fact that they need to sell to make margin calls
Good point-It is incredible how quickly we forget, or deny, the mistakes made in the last bubble. It was only 7 years ago since the unraveling of the internet/tech boom. Yet we were already starting a second boom, the housing bubble. (contrary to inside pundants, who claimed, year over year, "this is not a bubble!") What a ridiculous herd mentality capitalism,or rather greed, influences. We don't have the patience for slow steady progress. Everything has to come with a fury, then exit with a fury.
The faster/higher they go, the harder they fall. We all have to suffer for this mentality, it ripples through business and personal life, through towns, states, countries, and continents. Instant gratification followed by the unthinkable, instant suffering.
As I recall, general expectations were that the market could pull back 10% (from 14000 on the Dow), and that would be "healthy." Yet there is more doom and gloom then their is chatter about this being a healthy pull back. I guess it is the snowball effect. At least it (the slide) should be over soon. As messed up as we are or can be, we are also quite resilient.
That's my rant for the day
Gfp-thanks for that (positive) explanation of where you stand. Your non-involvement in Cortex shares completes another piece of the puzzle on whether or not history will (partially) repeat itself.
Not that I don't want you to be involved. You will get on board and make money on Cortex when the sentiment begins to change. You just won't be starting at the same point as the others on this board. With your cash hoard, though, you will still be making more than us, despite the higher purchase price.
Cortex is like a pressure cooker ready to explode. I have no facts or inside knowledge to back this up, just a gut feeling. I do however, have IBS so my gut is not always reliable.
Haysaw
I take it back-it might have been Gfp loading up again, with the warrant sellers dumping right into it. A spike to 2.87 and then right back down to 2.42? Normally I don't get caught up in the intraday fluctuations, but this stock is behaving quite strangely.
Hey everyone-it is looking more and more like the precipitous drop before the surprising ADHD results that sent us to the moon (and back) about 17 months ago. Can history repeat itself, with an improved ending? Why not!
Hang tight. The action this morning was probably just some attempt to capitalize on the current widespread fear which is beginning to resonate with investors-trying to loosen the shares out of your grips.
I disagree with putting more money into Cor-particularly if you averaged in the 1's and are already heavily concentrated. We all have different risk tolerances, so to each their own-particularly those with consistently good instincts.
Check it out! Cortex already coming back amazingly as I close out this post. If it is all good from hear on out, I want to be known as the Catalyst.
Haysaw
Do we know if ampakines increase dopamine levels in the brain indirectly?
Blade-I guess you're right. The CC is most likely for quarterly results. It would coincide with the previous one on May 9th (3 months).
If the CC includes more commentary from ongoing positive CX-717 discussions with the FDA, then the IND would be more of a formality, and we would have more closure on the ADHD dosing concerns. That I can live with.
You're low odds of a partnership is disappointing, though. Is that because it will most likely be inked after the IND is approved?
BTW, chances are good we will get a bounce tomorrow since Gfp unloaded some shares.
Neuro, Gfp, Davidal-Do you feel strongly that the conference call (eluded to by Stoll) in mid to late August is only in reference to the IND filing? Is that a normal procedure?
It seems that if they were going to round up investors, analysts etc., it would be regarding something more important-such as the FDA's acceptance of the IND, a partnership, or progress on CX-701.
Underwhelming indeed, at least for me. We have known since early in the year that Cortex' goal was to submit an IND for CX-717. If the conference call simply lets us know they just submitted it, then the only thing that that gives us is another timeline for a binary event (30 days max). Wouldn't they just release a PR for that? Save the bells and whistles of a CC for something bigger.
Gfp-OT-An israeli defense/security company is MAGS(Magal Security Systems).
Let me know what you think. I haven't researched it too deeply (or bought), but I've been watching it for a while.
Haysaw
Thanks Dew-Maybe Cortex' first blockbuster will be a combination with an Aricept type drug.
Thanks for finding that. Is that solely a Cortex patent? Any idea what the Aricept patent life is?
TIA
Speaking of benefit/risks, the Celebrex commercial claims, "the benefits outweigh the risks." Earlier in the commercial, the disclaimer narrator said " it may cause death." The pharmaceutical commercials are eerie.
It's an interesting dynamic though. Alheimer's/memory loss is a big market. Would they be able to slice off royalties for the same drug with different companies. Let's say the synergy between Aricept and CX-717 led to an excellent deal with Pfizer. Then with ADHD-A different BP who needs CNS in their pipeline. That could be a good way to capitalize on one drug. Neuro-would something like that be possible?
Does that extend the patent life for Pfizer with Aricept (combining it with CX-717), thus making it very lucrative to them (and Cortex)? That is assuming their is a limited patent life left on Aricept.
Perhaps a deal for AD will come first, with the same interested parties from before the sudden hold.
Of course, they will continue (with our without a partner), to develop High Impacts for Alzheimer's, Fragile X, Huntington's etc., carrying with it An even greater novel treatment/cure potential and revenue windfall!
If only it played out the way of stream of consciousness.
Right now, it seems the only people salivating over Cor is the few, the proud, the Loyal Cor Shareholders.(:=)
Holy Sepracor! Not a good day to release disappointing results. Looks like a good short term opportunity-the sell off seems way overdone.
Neuro's logic that Neurology wouldn't have allowed even the AD PET dose liberalization if they still has serious concerns about the histo/artifact phenomenon makes a lot of sense. In the current cautious environment they would likely have just waited if they weren't leaning strongly toward full dose liberalization all around. Anyway, that's my take on it. Of course I still worry about Murphy's Law striking again, but one has to weigh the odds and place their bets based on the probabilities
Gfp-It certainly helps us breathe a little easier knowing Cortex is free and clear to move forward with the AD trial, although, they don't seem to be too interested in that indication. That is a separate issue-Do they have their doubts on success for AD?
Regarding ADHD, perhaps something could pop up with the Psychiatry review, but like you and Neuro feel, that is unlikely. I am also confident-based on the EM proof- that we will get the green light.
One other thing. The idea of dosing AD patients with very little to lose, i.e. no cure or effective treatment, is quite different than dosing (mostly) healthy adults with a non-life threatening condition. It's a benefit-risk thing. I know I have heard this arguement in times past, but it hasn't been pointed out recently. Given this, I am more comforted by what we know with the EM results, than I am with the green light with AD.
I am holding tight, at this point, but I am considering unloading a small position to buy more ALVR.
Haysaw
Come on, I can't be the only one who gets a kick out of the jouvenile feuds on this board. Bladerunner made a great point about intolerance, unfortunately, it was glaringly hypocritical. I do side with him on Gfp's opinions though. Gfp's word by word analysis and putting it into perspective, i.e. the current stock price, is excellent. In retrospect, the news did/does not translate into a homerun. The PR and its focus on AD was peculiar, and should absolutely be questioned. All along, the holy grail seemed to be ADHD, which was left out of the release.
I understand why they couldn't basket ADHD with the dose lifting, being that is handled by Psychiatry, but let's go back to the original announcement of the submittal of the paperwork a few months back:
IRVINE, CA (April 18, 2007) — Cortex Pharmaceuticals, Inc. (AMEX: COR), sent two large data packages to the Food & Drug Administration (FDA) today regarding the Company’s lead Phase II Ampakine® product candidate, CX717. One data set went to the FDA’s Division of Neurology Drug Products and the other went to the Division of Psychiatry Products. The original CX717 Investigational New Drug (IND) was filed with Neuropharmacological Division (now Neurology Division) for the treatment of Alzheimer’s disease (AD) and the other data package went to the Psychiatry Division, where the Company intends to file a second CX717 IND for the treatment of Attention Deficit Hyperactivity Disorder (ADHD). The submitted data package provides clear evidence that the specific histopathological changes seen in animal toxicology studies, which previously caused the FDA to put CX717 on clinical hold, is a postmortem fixation artifact and is not found in the tissue of the animal when it is still living.
Dr. Roger Stoll, Chief Executive Officer of Cortex, stated, “When CX717 was removed from clinical hold on October 6, 2006 by the Neurology Division a dose was permitted for continuing a study in patients with AD, but that dose was too low to permit the assessment of the drug in patients with ADHD. Further information was needed to better understand the cause of the histopathological changes.” Dr. Stoll added that, “We now have a substantial data base which clearly documents the fact that the histological changes of concern occur postmortem when the fixative solution is used to prepare the slides of the tissue specimens.”
In early March 2006 Cortex reported in a small pilot Phase II study, that CX717 had demonstrated positive clinical and statistical results on the primary endpoint, the ADHD rating scale and the sub-scales related to attention and hyperactivity which are used for the approval of all currently available ADHD treatments. Consistent with all previous studies involving over 220 patients and healthy adults, this study demonstrated that CX717 was safe, well tolerated, and produced no increase in heart rate, blood pressure or other cardiovascular side effects. Cortex intends to cooperate fully with the FDA and the Company must now wait to hear from the agency regarding their willingness to approve higher dose levels for studying CX717 in adults with ADHD, and the Company’s subsequent desire to proceed with a larger Phase IIb study for this indication.
This is nothing groundbreaking, but with the focus of the submittal being heavily weighted on ADHD, it almost seems obvious why the reaction was subdued. I don't think Cortex was clear on how the decision was going to come down vis-a-vis CX-717, whether they would get a blanket "okay," or what actually happened, which was a AD go ahead but a wait and see for ADHD (based on the IND)
If all goes well, you will regain credibility. As a loyal Cor long, your wisdom will be visible. First,we must breach 5, and then 10 pps., and if you're still here, the curse will be reversed. After that, I don't know, do everything opposite then in the past.
To a prosperous future
Haysaw