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Protalix's third quarter report was less robust than many (especially traders) expected. Strictly a matter of timing as Cheisi builds inventory to meet patient need. A review of the 10Q shows raw material inventory increasing 20% to $4.2 million at 9/30/2023 and work-in-progress inventory increasing 240% to $9.1 million at 9/30. Finished goods inventory ended the quarter at $8.3 million. This sets up for a pretty robust 4th quarter revenue outlook. Regulatory milestone payments should be in order for recent approvals in the UK and Switzerland. Management stated no more financing needed. Keep the faith, looking quite positive for the coming quarters..
As we all know now the approvals by the EMA and FDA are for once-every-two-week treatments only, not for the once monthly treatment. I correct my post # 3860 which included patients for both. Still think it reasonable for Chiesi/Protalix to have 2000 patients under treatment in 18 months, therefore I stick by my earnings and value expectations.
I noted the J. Vandermosten from Zacks suggested " the # of patients to be 15,000 in the associated regions". If the pricing of fabrazyne is similar for Elfabrio then that implies a much bigger market and sales dollars than anticipated.
Management assures me both they and Chiesi have adequate inventory to meet an early marketing campaign.
Hope we soon get through this brutal short-term profit taking and short sale fascial.
Spideyboy, I would appreciate your help in clarifying how the PRX-115 phase one trial for severe gout is conducted. In the 3/21/2023 release it states: The trial is a single ascending dose (SAD) study with up to seven cohorts, and patients are being randomized 3:1 to receive a single intravenous (IV) dose of PRX-115 or a placebo. It says a patient can get up to seven treatments (I assume if needed). Then what does the word single mean later in the release? How frequently might the "up to 7 cohorts" be administered? Even though phase one trials are not to determine effectiveness, considering the nature of gout, it seems to me they will know rather quickly if it is effective or not. Agree? As of last week, they stated that they have 9 patients already being treated. If this works, this is another major market opportunity since there is little out there to treat severe gout. Thanks.
Thanks. Spideboy for your analysis of how market share may be achieved. I agree, assuming FDA approval. My thoughts continue to be with the 5 elements of revenues (initial sales of the substrate to Chiesi, regulatory milestones, commercial milestones, US royalties, & non-US royalties), and virtually no marketing expenses, with only1000 two-week dosed patients and 1000 once-a-month dosed patients 18 months in the future they will have the revenue stream that could very well generate $1.50 in net tax-free earnings per share. At a 15 multiple that suggests a price target of $22. This is with PLX getting on average 35% of the total revenues with Chiesi keeping the rest. In my thinking I have used about 75 million shares outstanding at that point. This would value PLX at about $1.6 billion at that point.
As to the current price volatility: I think it may be temporarily self-inflicted. Here is why: Selling more shares under the shelf registration in place with the SEC (and Wainwright). On 1/1/23 PLX had 53,790,167 shares outstanding. During the first quarter they sold 8,212,482 shares at an average price of $1.73 and raised $14.2 million. In early April after the quarter ended, they sold another 3.412,268 at an average price of $2.32 per share raising an additional $7.9 million. (see the 10Q) Looks like some profits are being realized (at least temporarily) regardless of the very favorable long-term outlook. In my view this too shall pass with the potential growth in the second half of the year.
Any other thoughts would be welcome.
Thanks Kayaher for posting the Zacks updates to this website. As always, thanks Spideyboy for detailed reviews. For what they are worth, here some of my thoughts about PLX developments:
1. I think the Protalix/Cheisi relationship is ideal for both parties. I believe talk of a takeover of PLX is ill-advised. The Chiesi/Protalix partnership is shareholder protection from a big pharma unwanted takeover. I like that for I hope long-term holders realize the {probable} full potential here.
2. Some seem to be disappointed by the PLX price performance since the EMA announcement. I think there are three reasons for that: a generally lousy stock market; the fact that it was almost immediately known that the EMA final decision is still two months away; and the fact that PLX is in the midst of a not very well understood ATM financing with H. C. Wainwright. As we get closer to May, I do not expect the price action to be this muted.
3. In reviewing the 10K; I note that the "net operating loss carryforwards (NOLs) are $247.4 million, mush larger than I previously thought. That means a lot of non-taxed US accounting-based earnings in the future. There will be some Israeli based taxes and repayment of Research and Development grants from the Israel government that will be charged against earning but nothing that will materially affect the above noted NOLs.
4. Also in reviewing the 10K, i noted that the ATM financing is already well along; probably rewarding Instituational Investors that have supported PLX for years. At 12/31/2022 only $11.3 million of the $20 million ATM/Wainwright deal remained available. This sale of stock in the latter half of 2022 increased the shares outstanding to 57.4 million. (From 52 million the prior quarter). PLX also stated that in January and February of 2023 they sold 3.6 million shares, raising another $5.5 million. That leaves about $5.6 million dollars of the ATM remining. I don't know anything specific, but I would not be surprised that a good portion of that is purchased by Wainwright for future sales to the public at much higher prices.
5. What is the marketing name for PRX-102? It has been suggested that it is ELFABRIO. Elfabrio is a trademarked name held by Chiesi. But it a broad-based trademark that covers a broad array of disease categories, seemingly not unique to Fabry disease. We may have to wait until May to learn of the true marketing name for PRX-102.
Al in all, I think longer term holders will be well rewarded as shareholders of PLX.
Thanks Spideyboy for your detailed analysis. Will be interesting to see what we learn later this week from the EMA and on Monday morning from management. Just curious, in your post #3755 you suggested that you hoped they would circle back on the development of OPRX-106. Has the market changed that would warrant that? They do not even list it any more on their website.
Thank you, Spideyboy, for the EMA approval process analysis. Much appreciated.
In my mind, only open issues left are the pricing of both every two-week and once a month treatment, and insurance reimbursements. Per their agreements I believe it is Chiesi that deals with these. Hopefully, PRX-102 pricing will be close to the cost of Fabrazyne for every two-week treatment and a premium above that for the once-a-month treatment.
Once approved by both the EMA and the FDA, and a steady build of patients on PRX-102 I look for TWO dollars of net earnings per share in about two years. At a 15 multiple that suggest a target price of $30.00. At that point I expect about 70 million shares outstanding. The milestone and royalty revenues primarily drop to the bottom line only offset by an increase in the clinical costs of the gout trials in the next couple of years. (The cost of goods sold will be recorded against the sale of PRX-102 substrate to Chiesi with, I assume, a small reasonable mark-up) Remember, they have in the area of 150 million dollars of tax loss carryovers which means tax free earnings until that is used up.; therefore, higher per share earnings. Our patience may possibly still be rewarded.
Njce to hear from you Spideyboy and other patient PLX holders. From some questions I ask, here are a few interesting items I have learned very recently directly from Management: (1) Once 102 is filled and finished by Chiesi into (storage) vials, not infusion bags as I had assumed, its shelf life is 4 years. (2) Cheisi built a suite onto their fill and finish facilities in Italy for the production of 102. They already use this facility for another product they sell in the US, which may help ease the inspection process. (3) Unigal has been tossed around as the potential marketing name for PRX-102. The actual marketing name is still confidential and apparently will be released as approval moves forward in the near future. (4) Approval in Israel will likely tag along with approval from either the EMA or FDA. (5) They expect to start to fill Cheisi's pipeline in advance of approval which suggests first quarter 2023 sales to Cheisi. (6) Finally, there are two types of milestone payments: regulatory and commercial. The regulatory payments are received as approvals are received in various jurisdictions such as the EU and US, etc., etc. The commercial milestone receipts will follow at internals as the number of treated patients grows. In addition, we have the 15 to 40% royalties as the patient are treated, depending on rates in different jurisdictions and the number of patients treated.
2023 should be exciting for Fabry patients, management and shareholders. Will PRX-102 become the SOC? I believe so! Happy Holidays to all.
I think the SEC form 8-K filing by Protalix yesterday about their expanded relationship with Chiesi to good news. In a nutshell, it eliminates the French firm from the production process for PRX-102. Now a much more precise and controlled commerical fill/finish process. This will eliminate the need for the FDA and EMA to inspect the French facility as part of the approval process. Now, hopefully they only have to inspect Protalix's production facilities. The way the release is written implies to me there are not significant changes to the other marketing agreements between Protalix and Chiesi.
Hope they announce soon that they have filed all final phase three data with both the EMA and FDA so the final approval process is moving forward. I would think filling the pipeline with PRX-102 treatment could well begin in the fourth quarter of 2022 if approval is to come from Europe in the first quarter of 2023. This would trigger milestone payments and sales of drug substrate to Chiesi.
I listened twice to the Lifesciadvisors webcast with Dr. Warnick. As low key as it was there were some interesting tidbits that are good to know:
1, Home infusions in the trial kept the trials going (because of covid) and will be very helpful in the future.
2, Much less infusion reaction is an important patient positive which alone will stimulate switching to PRX-102.
3, He appeared to be thrilled to have been part of an actual comparative study and potentially have a better treatment option, rather than telling patients US patients he has only one treatment option to provide.
4, In response to a question at the end, PRX-102 does not reverse the disease but PRX-102 better slows the decline vs Fabrazyme and improves the quality of life.
Other matters of importance:
1. It was the FDA that changed the study to non-inferiority from inferior because they officially approved Fabrazyme recently.
2, I though Dr. Warnick was very clean in saying that there is nothing being developed by others (such as gene therapy) that is anywhere near replacing ERTs as Fabry treatments. Looks like if approved by early next year PRX via Chiesi will have years to have Dror's predication of a potential $1 billion royalty stream a reality.
3. PLX has plenty of compacity now and in the future to meet demand.
4. PLX believes if approved it will include both the twice and once monthly treatments. There are now 150+ patients in the extension studies which include both twice and once a monthy treatments.
Conclusion: We just have to wait for the approval process to run its course. Hope this summation is helpful and will convert traders into long-term holders of PLX.
Hi All. This is finally good news, first for Fabry patients, and us as patient shareholders.. Extraordinary volume in the stock. Looks like the float will be turned 4 times in one day. Just hope it is moving into longer-term holders. I expect a lot of volatility until we get closer to EMA approval; then a 300 to 400 million market cap by year end.
If I remember correctly, under their rules, the FDA has 30 days to determine the next course of action after a class A meeting. Since their were no clinical issues with PRX-102 I hope they act responsibly in the interest of Fabry patients and do this: rely on the site inspection done by the Israeli inspectors, which Dror told us they have received, and move to the next step for approval. I believe this would be the quickest way to approval. Keep hoping for a positive outcome for PLX.
Thank you, Spideyboy for your insightful analysis in the prior post. It is most helpful. As you probably noted they are doing three small proof of concept, placebo based trials (TCOM, Hypoxia, and DLCO) to hopefully shed more light on the benefits of TSC. The results of the TCOM trial is to be released by June 30. The other two before year end. It will be interesting to follow results. I did find an interesting review of the potential benefits of TSC, dated 4 April 2021 by Hriday M. Shah and others in Drug Development Research/Early view. (doi.org/10.1002/ddr.21814). Thanks again.
We patiently wait for the PLX Balance interim results, the inspection date and the Class A meeting notes. In the meantime, Spideboy, would be willing to share your scientific thoughts about TSC (Trans Sodium Crocetinate) oxygen supplementation to various body organs being developed by Diffusion. DFFN. There is an InvestorHub sit available; which is very inactive. Perhaps we could exchange thoughts on that site if you would like to share your thoughts. Thank you.
A CRL. What a difficult slap-in-the-face to patients, this management and shareholders. To me, the inspection of facilities is the lesser of the two issues. Spideyboy, would you care to comment on this: Fabrazyne, recent full approval, "must be addressed in any potential resubmission seeking accelerated approval". Was there any additional clinical data provided that lead to the full approval of Fabrazyne that might trigger the FDA to require additional clinicals for PRX-102? The continued decline in the stock price with exceptional volume is concerning, to say the least. Thanks, Spideyboy.
I was traveling and unable to participate in the conference on Tuesday morning. I have e-mailed Rubin with a question about the status of OPRX-106 and if they are still working with Kirim. Will share if and when I learn anything.
OPRX-106 having been dropped from the Wainwright presentation, without further explanation, continues to intrigue me. It has been such a (potential) high profile asset for PLX, with a large market opportunity, for a number of past years. Is it possible they have reached a sale to develop it with a partner (under a Technology Transfer Agreement {TTA}) but the legal work is not yet complete? This would have required them to drop it as an asset but could not yet announce details. If I remember correctly, the Fiocruz (Brazil) arrangement will eventually end in a TTA. They have in the past discussed these kinds of arrangements for their plant based drug candidates. Also, some three years ago or so, they disclosed that they had developed a plant based Humira. This is all conjecture on my part. Makes the conference on the 30th very intriguing!! We shall see next Tuesday, if not before.
Thanks Spideboy, I appreciate your thoughts and analysis.
Here is an interesting note: in each of the 3 prior years mgt issued a press release prior to 3/6 announcing the date of the annual review shareholder conference which was held the following week. Nothing yet this year!! Interesting?? Especially since OPRX-106 was dropped from Wainwright.
As you suggested we should know from the conference call what is afoot with OPRX-106. In my mind either one of two things: Either alone, or in discussions with potential partners, it was determined to be too costly to develop and compete with Humira or they are in discussions with a partner which can not yet be announced. Just speculation on my part.
Hi to all PLX followers. I still have my position and believe our patience will soon be rewarded. If I may, a question for Spideyboy: Why no mention of PRX-106 for UC by Dior on today's Wainwright presentation? Thanks.
We just received the very good news for which we have been waiting. I am thinking a mid-December approval. Dror and Eyal said they are transitioning from R & D to supporting activities to support the lance of 102. This means to me that they will be making 102 soon to fill the pipeline. I am assuming they will ship the drug substrate in bulk to Chiesi who will prepare the infusion bags and do everything else necessary to get 102 to patients for treatment. Thus, I expect some revenue booked during this and the fourth quarter for sales of the substrate to Chiesi.
In it's simplest form I look at the royalty revenues as follows: Assuming 102 is priced at the going rate of the present two treatments at about $220,000 per year, PLX per patient royalty would be $55,000 at the 25% rate and up to $88,000 at the 40% rate. If,if Chiesi were to have 500 patients on 102 by 12/31/2021, PLX annual royalty revenues would be somewhere between $27 and $44 million. There will be slow build up throughout 2021, generating quarterly revenues.
I expect the IIs who have warrants will have exercised them by 12/31/2021 (with PLX getting another $40 million). We will have about 55 million shares outstanding at that date (includes 5 million insider shares which will be available for sale) which will be the real number of shares in float for EPS calculations going forward.
The numbers can become material depending on how quickly patients get converted to 102. This is why Dror said "we have an opportunity to establish the Fabry treatment market for the next 10 years, but we must still finish the job in coming months".
I would welcome any other thoughts on how revenues might build in the future.
Of related interest: GSK announced they are developing a plant-based (tobacco) covid.19 vaccine with Canada's Medicago. Medicago is 33% owned by Phillip Morris and 67% by Mitsubishi Pharma. I believe that Medicago does drug development similar to Kentucky Bioprocessing. I would like to think PLX has as good if not better science than these two tobacco company subs. Look forward to near term good news on 102 developments.
Gentlemen: Our PLX news driven stock has been performing well of late. Next couple of important press releases on 102 developments should add more sustainable value. Before we know it in the fall/early winter analysts will be able to start the earnings modeling routine. How about 3rd and 4th quarter revenues (or royalty payments?) from pipeline filling?
Possible reasons this higher value may not happen: FDA delay, not likely in my view; and a stock market that goes to hell!
As to Highbridge, they have owned convertible notes for years. I believe they participated in the financing to the extent they maxed out both (stock from conversion and the financing) at 9.99%. Same for O'Conner.
THANKS TO ALL FOR THE VERY QUALITY SCIENCE AND RESEARCH BEING SHARED ON THIS WEBSITE.
Thank you Spideyboy for your explanations in post #3037. They helped a lot to understanding the PLX science. That helps to explain why about two years ago Moshe released a statement they had fully expressed Humira to their Procellx system. Does this not suggest that a lot present CHO based high value drugs could be converted if there were reason to do so? Does the substrate of all or most CHO based drugs come out of China? (Here I go again picking your brain -sorry).
One thing that surprised me from the conference call was that they were producing the 102 substrate in Israel, but the vial preparation was done outside Israel. That makes it similar to Eleyso with Pfizer. Is this often a normal procedure? Thank you again.
Certainly good news that the BLA has been filed. Monday morning call should be interesting.
Spideboy, a couple of questions if you don't mind: What plant protein is the basis of Eleyso for gaucher disease? I saw some reference to a gaucher treatment (specifically, Cerdelga by Genzyme) as a potential treatment for covid-19. Does this make any sense? Thank you.
King oil, thanks for the note of appreciation, but the real thanks goes to Spideyboy for his science and medical contribution. I have continued to accumulate PLX in part thanks to his confirmation on the science and drug development. Also, I think there is a lot more to this story than just PRX-102.
As to the financing I believe they listened to the consultants who layed out the financing as the best plan at the time for their situation. And then Eyal pushed to get it done. One of the biggest puzzles to me is why they had not moved forward with a partner on PRX-106, even prior to the arrival of Dror and Eyal. Makes me think of two possible reasons: there is something in their Cheisi agreement that requires them to concentrate on PRX-102 until the BLA filing; or they really want to do PRX-106 by themselves. Later this year they should be able to do so. Just hope the conditions are such that they can get a phase 2B trial into high gear. Cheers!
Hi Trickshot. Thanks for thinking of the milestones. I am still confused as to when the first one will be received; at the BLA filing or upon approval in September (or later upon approval). It will be income and more cash on the BS. All good. More income sooner with little cost of goods, other expenses since Chiesi is absorbing the marketing costs, and tons of tax free NOLs. If my timing on approval is correct the fourth quarter financial report could be quite interesting! Time to keep the faith in PLX.
I remain very bullish on PLX. The apparent superior treatment for Fabry patients from PRX-102 is a wonderful achievement. The actual filing of the BLA, hopefully this month, I believe will help to lift the current 100 million market valuation somewhat more in June. Because 102 is a much better treatment I expect the FDA to approve it in four months; therefore in September. That should set the discounting process in place for much higher values as we approach the roll out of treatment.
In the meantime the muted response to the current good news is: market conditions; covid 19 delays, and PRX's capital structure. By this I mean: there are now 32 million shares outstanding with another potential 32 million to come on the market in the coming year or so. (17 million from warrant conversion, which will add $41 million to the balance sheet, and 9 million from convertible note conversion and approximately 5 million from stock option conversions to outstanding shares). This means the real outstanding shares will be around 64 million shares.
It will take visibility that 102 is quickly replacing the present two treatments in the fourth quarter and early next year for the market to absorb these additional shares. I believe this can happen. Pricing and the royalty stream will come into focus by the first quarter 2021 which will help. Analysts should be able to develop EPS models by year end. It will also be helpful if management gets moving on PRX-106.
I believe this sets the stage for a minimum $1 billion market value in a year from now.
Spideyboy, I looked at what Kentucky Bioprocessing (a division of Reynolds American Tobacco) is doing with young tobacco plants in developing a protein to treat covid 19. With your scientific and medical knowledge I wondered if you might take a look at it. I wonder, with the advanced state of development of 110 at PLX and their use of the Philips 1-neb AAD inhaler system, if this might be an avenue for them; especially since the use of respirators in treating this virus is under scrutiny. Would welcome your thoughts. Thanks.
Nice to see positive movement in PLX. I believe it is significant that Israeli based institutional investors took a significant portion of the recent financing. Nothing like "home grown support". Should give all investors comfort that there are real assets in this company with long term value in addition to PRX-102.
The timing of Dr. Schwartz open market purchases is interesting relative to SEC quiet period rules. First purchase was on 4/7/20; SEC filing on 4/13/20. I thought there was a 30 day quiet period for insiders prior to corporate news releases. The filing was signed by a third party,POA. Anyone have any thoughts on this? Might it move news releases into May relative to 102 developments?
My thoughts on the PLX annual report and 3/12/20 conference call:
I was elated when the first news release was a financing, though costly and dilutive, I am very happy it is done. Especially more so with the financial situation today because of the covid 19.
I thought Dror was especially upbeat and he noted the high energy of the entire company.
As to the financing they will net $41 million now and another approximately $40 million over time when the investors exercise their warrants. Per the financing documents, they must register with the SEC within 60 days from today, 3/18. So, for the first quarter 2020 report we will have 32.4 million shares outstanding (14.8 + 17.6 from the financing). If things go well we can expect the investors to exercise their 17.6 warrants over time resulting in 50.0 million shares outstanding, perhaps by mid year 2021. The negative effects of the dilution will be apparent in future per share EPS calculations. Fortunately future earnings will be tax free due to approximately $180 million of NOLs.
The source of revenues continues to grow and grow: Pfizer, Brazil, Chiesi product royalties and milestone payments, recognition of deferred contract liabilities from Cheisi and now Kirin. I would not be surprised if we get another Kirin like deal this year; and I expect to see them move forward to get OPRX-106 into phase 2b clinicals in the near future.
I noted sifting through the SEC filings that employment at year end was 196 vs 184 last year, vertically all in R & D.
One of the most interesting things to me was the way Dror shot down the Wainwright analyst's question about 106 and 110. We have since seen the release on Kirin. I am intrigued about what might be happening with 110. In their February corporate update presentation they changed the presentation language for 110 to "DNase for multiple indicaions". Is this now a priority R & D effort? What might these multiple indications be? Lung alignments from other causes?
Under these awful investment conditions, PLX is holding together pretty well. Am I bullish on PLX? Very
Thank you, Spideyboy, for your most recent post. Your analysis of PRX-102 is very helpful and helps to keep the faith and be patient with PLX.
Spideyboy, thank you for your extensive update in answer to Kronberg's inquiry. Much, much appreciated. You mentioned PRX-110 is still alive. Do you think there is any possibility that it, with it's inhaler delivery method, could be useful to clear the lungs of people with coronavirus that have lapsed into pneumonia?
Otherwise, waiting patiently for the many developments on PRX-102, financing, and their course of action on moving OPRX-106 into more clinicals. Thanks in advance.
Correction to post 2870: effective this Friday, 12/20, not today as noted.
Phase 1 of the restructure is complete. Hats off to Dror and Eyal for accomplishing this in three short months. My conversations with Eyal suggest he is an aggressive go-getter.
King Oil and Spideyboy: I believe the only explanation for the favorable vote is that J. Streicher, the market maker, had 10s of millions of shares in his inventory that were voted in favor. On 10/11/19 the stock was at a new low $.18; as required he had to absorb selling pressure. In effect he became an insider. They scared enough others to join the party!
Monday morning the common stock capital structure will be as follows:
Authorized 120,000,000 100%; shares o/s 14,800,000 12.3%; reserved 12,200,000 10.2% and available for financing 93,000,000 77.5%.
A straight 1/10 R/S would have meant 35,000,000 shares of newly authorized shares. By approving 120,000,000 they have 85,000,000 additional shares (part of the 93,000,000 above) for future financing, at the expense of other shareholders.
What is done is done. I hope they stay aggressive and use these resources to put cash (working capital) on the BS in the same short time frame as it took to do phase 1, FOR THE PURPOSE TO GET OPRX-106 INTO A PHASE 2B CLINICAL TRIAL WITHOUT A PARTNER. Would like to see them register and sell 30,000,000 shares to name II's or venture capitalists in a secondary offering. If the stock hold in the $3.00 area such a sell would likely be completed at a discount, say $2.50 per share, resulting in $75,000,000 working capital. That would help greatly to support the stock in coming months. In fact, with all the travel and contacts (and consulting help) I hope it already is in place, but I don't have first hand knowledge. This would be a decent outcome for us longer term holders.
What has hurt from having a higher market value at this time is not having more clinical trial results from OPRX-106. We should have been enjoying favorable phase 2B results for that oral drug for UC for a potential $12 billion market.
Let's hope the stock price holds together in coming months, considering that we have the same NYSE-American listing that has not served us well in the past.
King oil and Spideyboy. I will share my analysis and thoughts by tomorrow evening.
Hi Spideyboy. I can not offer much more of an analysis. Now that they have gone down this route the next thing that will happen is one of two things: either they withdraw the proposal (they clearly stated they have the right to do so) with an SEC filing or they will file with the SEC which of the three R/Ss they have obligated themselves to make public at least two days prior to 12/9/19. If they file the R/S that would imply to me that they have the votes. If it passes and we assume they do a 1/15 R/S we will have 120m authorized; 9.9mm outstanding; reserved 8.2m; available for future financing 101.9m. This 101.9m is not registered stock and does not move into float. (just as is the case for the 79m shares under the present cap structure) The Board will have the right, without shareholder approval, to use some of it as reserved for more cv notes or sale it to Institutional Investors as restricted stock. Otherwise, it will have to be registered with the SEC to be stock freely in float. If it passes they will have accomplished both objectives at the expense of present shareholders.
I said in an earlier post that I do not think their NYSE-American listing serves them and us well. The action last week with 13+ million shares trading in one day on very good news which added little value proves the point. This listing and the way it operates is a setup for speculation. I do not know what is involved to extract from this exchange and move to the OTC market, but I hope it had been considered before going down this recap route. Unfortunately, studies show R/Ss decline significantly after they occur and we remain on this speculative based exchange. Needless to say I am disappointed at this stage. We shall see within three weeks where we go from here!
I agree with others that they should have other ways to get needed short-term working capital on the Balance Sheet.
Hi Spideboy; responding to your post 2841: If they were proposing a pure 1/15 R/S, (and nothing else), there would be no issue. All relative percentages of the four stock categories would be the same. Our $.22 stock would then sell for $3.30. Pure and simple.They would have accomplished one of their two objectives which is satisfying the listing problem. HOWEVER, they have complicated this with the request that we approve an increase in the authorized shares from 23 Million (after the 1/15 Board vote) to 120 Million shares that provides 415% more shares (97 million) for future financing. This is very dilutive to us present shareholders as per my prior posting showed.
I wonder if they really thought this through? Attempting to do both at the same time and the way they are doing it by asking shareholders to give the Board voting control is really damaging to us. I can not envision the limited number of IIs backing this. We shall see in early December.
I hope this helps.
Hi King Oil. Interesting question. (1) As we know we are a public company so whatever gets done will require shareholder approval. So, put a crappy proposal up for a vote that probably won't pass because of excessive dilution to shareholders. They will have met their obligation to shareholders. They can then turn to other alternatives. (2) Bronfeld takes control of the Board and hires Basham as his new CEO. Basham hires Rubin as his hand-picked Senior V-P of Finance and CFO because of his past experience with this kind of restructure. Rubin, not Basham, signed the SEC filing. This is Rubin's plan. With the very low value to the company he had to go to extremes to get enough additional shares to add cash to the Balance Sheet while at the same time garnering more Board control. They have moved with a great deal of hast with this proposal. If it fails they move on to other options with little damage to the company's reputation. Bronfeld has to let it play out or he runs the risk of alienating his new senior managers.
I said in earlier posts that I though at best this was a Trial Balloon. My expectation is that this proposal will be withdrawn prior to the vote.
Further thoughts on the weak financial position of PLX. We, as longer term PLX holders, need to be thinking as Mr. Bronfeld, New Board Chairman and long-term investor, might be thinking. He is in a difficult position with science developments going quite well, but his financial side going south rapidly when it should be just the opposite. Being a public company with shares listed on the NYSE-American is not serving him (us) well. Unfortunately, the bulk of the shares are in speculative hands. Also, he has less than average Board/management and institutional ownership at this stage of development. Remember it took them three tries for shareholders to approve the increase in authorized shares to 350M. Mr. Bronfeld is now in a FINANCIAL SURVIVAL GAME to keep his company moving forward as a going concern. I view this R/S proposal as a last attempt to keep PLX as a publicly-traded company with more Board control. I feel strongly that there is a PLAN B AND POSSIBLY PLAN C IF THIS PROPOSAL IS WITHDRAWN OR REJECTED.
Let's remember they hired a top-tier advisory firm who (I presume) has provided an independent evaluation of the company. Also, the two analysts (Wainwright and Jefferies) have had buy recommendations on the stock for the last couple of years with future discounted values of $3 ($450M) and $5 ($750M) a share that was expected to be realized at about this time frame. This has to add to the frustration.
Based on past experience, there is only one way they might have the votes for this R/S proposal to pass. As a listed company J Streicher, as the market maker, has the responsibly to inventory the shares if there is no buyer on the other side of the trade. With all the selling over the last years has he accumulated 10s of millions of shares that could be voted for this proposal? With this block of votes plus scared or knieve shareholders voting yes do they have enough positive votes to pass? I can not envision Institutional Investors voting positive. We shall see!
The die has been cast. They are counting votes. I suspect there will be a lot of shareholders who abstain. THERE ARE THREE POSSIBLE OUTCOMES TO THIS VOTE:
1. In early December they do not have the votes and withdraw the proposal with an SEC filing. They go to plan B or C.
2. They let the vote happen and get turned down. They have given shareholders their chance and go to Plan B or C. Plan B take it private. This company might be a venture capitalist's dream to take private. That would require a shareholder vote which I believe would garner necessary votes at $3+ a share. Plan C sell it big pharma.
3. It passes. We along with Mr. Bronfeld, other directors and management are dilued to hell and they bring more cov notes on board to put cash on the balance sheet.
Let's discuss the proposed R/S: It is very dilutive to present shareholders and our shareholder voting rights are being shifted to the Board by virtue of the proposed 120M newly authorized shares and the ridiculous three reverse split options. It add no cash (working capital) to the Balance Sheet without further Board dilutive action.
Here are the figures comparing the present capital structure to the 1/15 R/S proposal. FIGURES DO NOT LIE: (Sorry I could not get these figures better formatted)
PRESENT CAPITAL STRUCTURE: (rounded numbers)
Authorized Shares 350,000,000m 100%
Shares outstanding 148,000,000m 42.4%
Restricted c. note conv
and B/M stock options 123,000,000m 35.0%
Available for financing 79,000,000m 22.6%
PROPOSED 1/15 R/S OPTION (rounded numbers)
Authorized Shares 120,000,000 100%
Shares outstanding 9,900,000 8.3%
Reserved 8,200,000 6.8%
Available for financing 101,900,000 84.9%
WOW, outstanding shares drop from 42.4% to 8.3%, while available for financing goes from 22.6% to 84.9%. AND CONTROL OF THIS IS SHIFTED TO THE BOARD BECAUSE OF THE REDICULOUS REQUEST FOR 120,000,000 NEWLY AUTHORIZED SHARES.
HOW BAD IS THE RIP-OFF?
1 FOR 15 PROPOSAL:
Requested authorized shares 120,000,000m
Shares from a straight 1/15 R/S 23,300,000m
Excess requested 96,700,000m
% of excess requested 415%
Out of the 148,383,299 shares that have a vote they need 74,340,003 positive shares to pass. (50.1%) Can they find these votes? I doubt it!
I will share further thoughts in another post.