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Graeme50, please don't misunderstand me. I am a full supporter of the science and the breakthroughs coming from the Team. Problem is, I'm not a fan of the current financial circumstances.
Unfortunately, we are paid back in dollars or cents or mills... depending on how well the Team performs.
Good luck.
F
What I am alluding to is the power of the unmet medical need. If they have a monopoly on such a disease, and it is clear that this technology gives them a monopoly, what is really behind the slow pace of finding patients willing to have their eye-sight improved? Is that a stupid question or are we really in the dark about the true market for this stemcell application? Thus, I'm not sure the Management Team fully comprehends the urgency felt by shareholders. Each day without the trial concluded, we walk another step towards a very painful dilution day.
Experienced early stage shareholders invest with this in mind. Dilutions are the enemy of early stage investors.
Secondly, are you aware that Rabin said last November that they thought they'd wrap up the trial by June 30th, this year???
That appears to be a material misstatement.
When I invest in these tiny biotechs, I have to protect myself against risk of dilutions and poor performance of trials. I'm not finding adequate performance by this Company over the past 5 months. Secondly, Rabin is starting to cashout his free options even though he opted to put into place a sales plan starting at $0.25 a share.
What is it going to be, CEO Rabin? Cashout now or hold on and get stock gains in a few years?
His actions speak much louder than his words.
In my humble opinion, ACTC doesn't need a PR person for the time being. Until there is real traction with the Phase I/II trials finally moving forward at a rapid rate, what possibly can a full time PR person really do other than hand-hold shareholders? It would be a complete waste of $125K per year.
Secondly, as this Trial is taking much, much longer than we all anticipated, a PR person wouldn't speed up the process and would become a target for disgruntled shareholders. About the only PR note worthy of public notification in the near term would be the completion of the second cohort for the 100,000 stem cells.
Yet, that would only mean that they would be only halfway through this trial.
The real attention grabber will be when the trial is done and in review with the FDA, will the FDA allow ACTC to go to the next step, starting a Phase II or will they jump the process forward to a Phase III? We all know that ACTC is hoping for a jump step up to a Phase III. But, such a step is not likely given the past politics of Stem Cells.
IOW, a PR person would be simply an unnecessary cash drain on precious Company resources for the time being. I'd rather have all cash supporting the trials.
No. That is not the case. When you do a subsequent transaction you are supply the source of money financial statements including footnotes and management opinions. The financial statements list cash and a cash flow statement. If the numbers are materially disallowed by the SEC due to illegal enticements to provide the cash by issuing shares of stock, you have opened up a Pandora's box of problems for your company.
Thus, the subsequent principals have incorrect balance sheets that have material mistatements of the nature of cash in its fiancial statements. That management failed to inform such subsequent funding sources can lead to lawsuits of fraud and even a criminal takings.
Very serious stuff.
Which leads to shareholder lawsuits. Did shareholders purchase shares based upon the reliability of existing financials.
This could open a serious daisy chain of financial headaches for ACTC. If certain complicating factors such as ACTC's culpability are established in the court, it could lead to a show stopping finding by the court.
If you have a serious monetary interest in ACTC, I strongly suggest that you consult your own attorneys sooner rather than later.
The SEC lawsuit simply clouds ACTC's future prospects. It isn't just about cash and funds raised in the past. It is about reminding potential joint venture partners going forward that ACTC has a special reporting relationship required with the SEC until the matter is cleaned up. It means that the Koreans, the Chinese and even the Japanese potential partners have to ask a serious question regarding ACTC. Can ACTC meet obligations requested in any partnership letter given the threat of the SEC lawsuit?
In some cases the answer is probably yes. But, with ACTC, they don't have an abundance of cash sitting around. If the cash gets placed into an escrow account with the SEC, that could be a very serious matter. That could happen if ACTC is viewed as an equal partner in the fraud.
No such actions have occured, of course, because the case isn't near adjudication. But, a threat of such is very damaging to their future prospects. Behind the scenes, you better believe Rabin is having a difficult time getting his lawyers to cut a deal with the Government. The Government is going to use ACTC to nail the Syndicator and Processor of the fundings. Thus, this matter may take a couple years.
To ACTC's credit, this is why they formed a very heavy Advisory Board to help steer the Company through the FDA waters. Having Dr. Langer anywhere close to ACTC is a huge coup. Yet, the FDA is still the FDA. Our Congress and Our Courts have unwittingly hamstrung small, innovative biotechs for more than 10 years with their foolishly conservative policies. The idea that they won't let experimental drugs move faster through the system is 100% foolish.
Seriously, why doesn't anyone with half a brain simply use a contract for users of various experimental drugs whereby the patient signs a contract acknowledging the risks and gives "hold harmless" relief to any insurance company/biotech company for any unforeseen complications due to the experimental drug?
Why do we have to have foolish congresses after foolish congresses, courts after courts involved at all? A POX ON BOTH THEIR HOUSES!
Let the user/buyer beware is the historical norm for all of us not wait 5 more years for the FDA to get off the pot. Why do we need a nanny-state with so many foolish steps keep our fellow citizens blind or in the process of losing their eye sight?
Be careful you are not getting sucked into the shorts' vortex. The game they play, and it is a dirty game, is to let the stock price run up to a higher level, suck in new retail purchasers that have visions of massive profits in their heads, and then start shorting again driving the stock price back down to even lower levels.
This is known as a 'fund raising opportunity for a hedge fund'. By shorting the shares, they gain funding up front. There's an economic incentive for them if they feel they can control the shares stock price. But, if the share price is too low for any substantial gains from shorting, they stimulate the stock price upwards. I'm my guesstimate, it will be around $0.085. Then they'll drop the hammer down until .055 or lower.
Again, this is an extremely high risk stock until the law suit has been completed and the next round of financing is complete and all sources of dilution are known.
One last bit of advice... Don't believe unrealistic reasons to own the shares. This Company has only begun the FDA Trial Process and has been EXTREMELY slow in completing the injections of patients. Do not believe the hype going on with this board. There are plenty of folks that have invested in ACTC on hope and prayer. Be forewarned. Some of the frequent posters have never gone through the agonizing experience of investing in a biotech so far away from commercialization. They should be labeled gamblers and not investors unless they admit that their time horizon is more than 5 years from now.
I will be surprised if there is an ACTC commericalized product on mainstreet before 2017.
Where as you might be right, Rocky, we need to remind folks here that ACTC is "management lite." Recall that Rabin, the CEO has not hired (to my knowledge) a CFO since he was selected CEO. SEC litigation is a very serious situation for ACTC as they have been named co-defendant. I'm not suggesting that they are guilty by association. I'm only suggesting that if Rabin's free time was scant before, imagine how a major lawsuit will drain his ability to devote time to ACTC's on-going business. Having lawyers buzzing around and court dates ahead, well, that might be problematic.
So, I think the board has to beef up the Company's financial function at a minimum. They can't screw around with fund raising any longer and pulling the kind of tricks that the deceased CEO apparently embraced. These are difficult talents to obtain and even more challenging finding someone willing to jump into the middle of a lawsuit.
Further, ACTC has to get a "heavy" general counsel to represent their interest and administering the SEC lawsuit. They have to find suitable representation that prevents the SEC from gutting ACTC's cash.
They have to get a "serious" legal secretary that can begin to get the board of directors up to speed with all the issues facing the company. Rabin will have his hands full protecting himself.
Meanwhile if this doesn't spin your head, this actually places a layer of Company execs into the fray and forces the CEO to manage his time better going forward.
I hope he's up for it.
The cost of this litigation will be significant. ACTC will try to cap the damage to disengorging the $3.5 million illegally gained and to cap the penalty to $1 million or less. At the end of the day, I'm GUESSING that we are looking into
a. a $5 million buck hit,
b. Shareholder lawsuits against the current CEO/former CFO for failing to divulge, and
c. a very difficult black eye for ACTC in future financings.
While some may suggest that ACTC is an innocent bystander to the number of crimes by the brokers, the former CEO played a very dirty game and bet the ranch on the financings.
This is serious stuff. This is a mandatory filing to acknowledge the investigation. This is not laziness. Why add to the mess they are in?
Recall, this was a very troubling financing time. All windows were practically shut for new cash. This was before any FDA approved trials with only rumors that their stem cells worked.
When desperate for cash, sometimes companies' managers wink at the rules for the sake of staying alive and then apoligize and file the necessary documents to dig themselves out of a hole.
The CEO and former CFO now has to move quickly to fix the balance sheet so that they can file the appropriate amended reports. may
change radically with the value of the warrants properly accounted for using the correct models set forth by the SEC Analysts.
This may trigger screams by any subsequent funding entities that provided cash on a disputed balance sheet/cashflow basis. The Real Economic Value per the SEC Analysts might cause a bunch of MORE DILUTION if those that provided funding was materially mislead.
Thus, it is sufficient to say at this point, the ball is in ACTC's court and Rabin must quickly come up with a game plan, go to the funding companies to make sure they understand the issues adequately and satisfy them before summarizing the steps forward publicly to shareholders.
The uncertainty now surrounding the financial statements is an interuption. I'm now very glad that they held off on the reverse split. They've got to get into compliance with the SEC on their financial filings before adjusting their shares.
Please don't worry about the reverse split. CEO Rabin said that they will choose the best setting for it because they only want to do the reverse split with important news. He did say that if they didn't do it this year they would resubmit their application for the reverse split first thing next year.
There's plenty of cash on hand for the next few quarters. Thus, there's no urgency. So, take a chill pill and try to take advantage of the low share price as soon as you can. But, and this is important... don't do something foolish like borrow money to buy ACTC shares. That's the equivalent of margin and you could really get hurt by being overly aggressive.
Let's say I definitely will take advantage of the low share price and try to ride an upward spurt. If this goes down to the $0.05 or $0.04 level, then this might be a screaming buy.
Yet, such a transaction would be very high risk and high reward situation with those that have the stomach for the risk. There are certainly no guarantees as to which direction this will move in the short run. I just continue to stay on the sidelines with any more purchases until we start seeing a bottom forming. That will take more than a few day to discern.
I am fully behind this medicine breakthrough... but the guys in the decision chairs have to start gaining some traction and get the new cohort eyes shot!
Best of luck.
Let's be frank. The last really big push upward was when the former CEO died and folks thought that could be the stimulus for a buy out. None of us expected this Chinese water drip torture of a trial that moves with the speed of a lathargic turtle.
If Rabin isn't concerned about this, I'd be very surprised. In fact, ACTC is not going to have a continuous well of cash ahead. The Street chews up early stage biotechs for sport and spits out the well-meaning stockholders bloodied and bruised.
As the stock is in the 6 cent range now, down tics are going to hurt more and more.
Which brings up a friends' experience with penny stocks. He bought a company for 3 cents a share. He was convinced that the net current assets were worth more than 3 cents a share. That stock fell to 3 100's of a cent, a 90% loss of value. Yes, the shares traded once in a while. But, that company couldn't sell itself and had to dilute the shares a couple of times.
I say this because you have to be wary of a pig-headed CEO that won't wake up and smell the coffee because his ego is in the way.
I guess you don't understand what I mean by early stage.
Phase I/II -- 2 years? 12 patients. Second year for writing up the results, presenting the to the FDA and receiving approval to go to the next level. Goal: Human Safety.
Phase II -- 2 - 3 years? 80 to 120 patients. 3rd year for write up and receiving approval. Goal: efficacity.
Phase III -- 3 - 4 years? 500 patients. Can it be 95% efficacious with an HR ratio of less than .75? Again long time from conclusion of the trial to BLA write up and FDA approval.
This company is a very long ways from FDA approval. The stock price is so low because the Street expects several diluting secondaries apart from any reverse splits. The fundings will co-incide with successful conclusions of trials.
Those that are expecting massive gains from this stock are simply gamblers hope that someone big will buy out the company at a nice mulitple. Left up to itself, this company might not have enough staying power to remain public and be taken private for a song and a dance.
So, as of today May 11, this is a very, very early staged biotech.
For all you so called experts that are starting to weigh in on ACTC's recent stock performance, all I can say is where have you been? For more than 6 months, more than a few of us have warned the faithful that real stock valuation is partially based upon expected future cashflows. When the initial patients for the phase I/II trials began last Summer, we thought, "oh boy, this will happen quickly". We did not understand the big lag between the first and second patients. But then, we really didn't understand the delay between the 2nd and 3 patients to complete the initial cohort.
Since the slowness of the trial, the Street has been walking down the stock value. The whisper and fear is that something is slowing down the doctor's abilities to shoot eyes whether it is from the University Centers or the verification folks.
The stock will recover when they finally get past whatever is delaying them. The Street hates delays upon delays. It means that future cash flows keep moving out into the distant future. That creates larger risk assessment and thus lowers the value of the biotech. Please keep that in mind when you begin to invest in a very early stage biotech.
There are some exceptions to some of the funds. Some can own stocks at $3 a share. It also depends upon the market capitalization.
Good luck to all Longs.
Thanks, Rocky. First time I saw it. Oh well. And the beat goes on!
The "news" is that we are now officially using more than 2 Billion shares outstanding.
In context, it is a huge number of shares and goes a long ways in explaing the weakness of the stock price.
shares outstanding per 8k, 2,033,169,437.
2 billion....! Wow!
That's about 22% dilution since September. Ugh! .082 / 0.78 = 10.5 cents. So, without issuing all the shares to keep the funds whole and to management to keep them around, the stock would be trading at $0.1051.
Sigh.............
Have they released any financials for the Q1 '12? I can't seem to find anything out on the street, yet.
Drano and others, please put on your scientist hats. The ACTC scientists have gotten a good result from only 50,000 cells injected into the RPE channel. The Stargart and Dry Macular Degeneration's diseases destroy cells so that the nerve route from the cones and rods can't get through the channel. And, these diseases are constantly after the cells. They don't simply stop because the RPE is refilled with 50,000 brand new cells. How long will 50,000 stand up against the diseases?
So, as good scientists, they want to see (no pun intended) how much more improvement there will be and how long will the cells last before they too start to be destroyed/degenerate?
Although the aim is merely to stop the diseases in their tracks, the scientists must be thinking, can we perhaps expect an even greater result? Of course they are not hyping this concept. The FDA does not want such early results hyped for fear of turning the science into a popularity contest and then political hot-potato.
Yet, we are talking about a huge step in science. In fact, an earth-shaking step IF the additional cells, the extra 50,000 cells on top of the first cohorts' 50,000 stay in place and truly add that much more clarity of vision to these patients. Could we start to approach recovery of color interpretation? Could we be talking about the brain focusing in a much greater way on objects?
In my opinion, the news is very meaningful. I'm happy for the Company. I do hope they can do the same for all their trials.
Again, again and again shareholders have to ask why the reverse split? Why now? Will this be the only reverse split?
A RS is merely a mathmatical calculation. Accountants will sharpen their pencils and start calculating. As far as adding value to the company, it accomplishes nothing by itself.
But, the share price right now is 8 cents +/- a penny or two.
So, you need to understand why they want the stock price up above $5.00 a share. It is more than simply listing the stock in a national NASDAQ index. They've already got most of that benefit now.
As far as funding, we have to look to the past fundings to see if they loan covenants/preferred stock exchange rates of the preferred shareholders allow for more shares to be sold... with provisions for keeping them whole. Thus, if a Company decides they need $50 million in cash for the next 2 years of trials and working capital, that may mean 10 million shares @ $5 a share. But, if the make whole provisions for prior offerings REQUIRES a keep whole provision, well, the number of shares issued could get rather ugly, say by a third more shares. This will whack down the share price pretty quickly.
So, Mr. and Mrs. Joe Investor, investing in ACTC.OB will not be a picnic for the gullible. This might be part of a greater strategy to keep the Company afloat as it goes through a significant equity raise.
This is why I think Dilution is a four letter word and a real consequence to the RS.
Let's discuss shorting and the market maker exemption. First of all, one of the more questionable accepted practices is the fabrication of phantom shares. These aren't quite naked shorted shares, but they are tantamount to printing shares beyond the control of the companies that they represent.
It goes like this. Even though there are no publicly traded options, it doesn't mean that market makers don't create psuedo contract that appear like options between themselves. As sophisticated traders/market makers, they can do anything they want as long as it isn't out right fraud.
So, market maker A. Wants to borrow all the available shares of ACTC. They want to legally short them. So, Market Maker then writes a contract to return those borrowed shares by "X" date to Market Maker B. The transaction occurs. The actual shareholders (us) don't know that our broker has shipped our shares to party A. He still shows that we legally own them and has a liability to us for them. But, now B has them and he SELLS them.
Notice... there's no uptick rule. So, if A can get their hands on shares from Scottrade, E-Trade, Schwab, et al, he can sell the shares all day long.
Here's the rub... Again, Market Maker B goes out and writes up a contract to purchase shares (like an option) at some time in the future at a lower, just out of the money premium with a whole different market maker C.
B is kept whole as he can repurchase shares with a completely hedged position. C has entered the option for the premium paid, and A returns the shares when B returns the shares.
Each makes money. Each has hedged exposure to ACTC. And B drives the share price down by legally shorting shares.
This is especially used by Market Makers against Weak Biotechs. Oh and who are the biggest shorts that use the above system to generate cash at shareholders' expense (losses)? Merrill Lynch, Goldman Sachs, Citi, JPM, and the rest of the big banks.
How do I know this? My Dendreon (DNDN) experience and Mark Mitchell's expose on the world of legal and illegal shorting called Deep Capture.
In the days ahead, the shorts (market makers taking a significant net short position selling shares ahead of news) will follow a game plan to "sell on the rumor and buy on the news".
I expect a rough couple of days leading up to the Annual Shareholders Meeting. That is, the shorts will put forth a bunch of collateral at their banks to offset their liability to buy back ACTC. They will do this and then sell the shares. As there are so many shares outstanding, they will have to locate shares to borrow. (the borrowee brokerages will want that cash transfered to them to help them keep whole if the borrowing short fails to adequately cover their short.)
Don't be persueded to allow your ACTC shares to be borrowed by your brokerage firm and then lent to the shorts to sell.
The efforts will end up driving down the stock perhaps as much as another 1.5 pennies or 18%.
When the stock breaks 7 cents, I'll probably start a purchasing effort to load up for the news to be released on the 22nd.
We could see a bounce back into the 9's or higher if the news is stimulating and helpful. This might just be a nice 40% gain over the lows.
Everyone has their limit to the slow slide as we wait for clarification. I wish it weren't so. I'd much rather buy from strength in the $0.18 range with the idea the stock was moving up than trying to predict the nadir and jump in.
ACTC's story is stale right now and needs an infusion of energy and positive vibes.
Pre-Reverse Split price? A few thoughts...
Folks are speculating on the eventual price of a reverse split. This is the wrong thing to focus on. The real question is "why is ACTC" engineering a reverse split at this time??? And of course the answer would lead us to understand their financial needs more clearly.
As of year end, they had cash & equivalents of $13.4 million on hand. They burnt an average of $3.4 million a quarter last year. This gives them just under 4 quarters of burn left. Assuming that they probably burned another $3.4 million in Q1, this leaves them with $10 million left.
Some have pointed out that they can tap various funds available for their lab expense. Say there is an additional $20 million through various sources. This leaves them with $30 million in funds.
Yet, the real cost of running trials is probably a million+ a month after purchasing the site's time to inject/doctors to monitor and tests required for measuring and following up on the patients.
Thus, I'd have to say that their cash projections are problematic at this point. We can't tell what is their real cash need.
Bottom line: how much cash does the Company really need to stay afloat over the next 2 years? $25 million? $50 million? $100 million or even $300 million? Now those are the kinds of numbers the Rabin has to finally decide upon with Doctors Langer and Lanza. How can they make any traction at all with so many products unless they begin to joint-develop the trials ahead with so many favorable indications.
Either we get diluted with any cash funding or we lose profits by sharing revenues. So, what's the answer?
Thus, the softness in the share price goes beyond the Annual Shareholders' Meeting if the cash strategies are not clarified.
Enterprise Value: EV
A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents.
Investopedia explains 'Enterprise Value - EV'
Think of enterprise value as the theoretical takeover price. In the event of a buyout, an acquirer would have to take on the company's debt, but would pocket its cash. EV differs significantly from simple market capitalization in several ways, and many consider it to be a more accurate representation of a firm's value. The value of a firm's debt, for example, would need to be paid by the buyer when taking over a company, thus EV provides a much more accurate takeover valuation because it includes debt in its value calculation.
Read more: http://www.investopedia.com/terms/e/enterprisevalue.asp#ixzz1rg5M2RLy
Thanks to investopedia for the straight forward definition and explanation.
I think you might need to take a look at Yahoo.com financial page for ACTC.OB. Then go to the key statistics. You'll find a daily calculation of the enterprise value (EV) as well as the market cap. If you are a fund strategist, you are going to monitor the EV very closely with these 2 aggregate values. And then you can push through a share price based upon the number of shares. ($171,070,000/.0845 = appx 2.024 billion shares outstanding.)
Example: Today the EV is about $171.07 million. As Micro Biotechs (like ACTC.OB) begin to gain traction, that value will be gradually raised. With a successful Phase II that value can rise into the $240 million range. With a successful Phase III the EV can reach $360 million. With FDA approval, you can see over $500 million. (of course on a massive rumor of a buyout, the stock will gain value not based upon EV but on the basis of the bid to take out the shares.)
Problem with this rule of thumb is the number of shares outstanding. If they expand, guess what, the share price falls. If there's a reverse split, take that same EV and divide by the number of shares.
Again, again, and again, if you want to understand how to value shares, you must truly see what adds value to the enterprise. Successful trials, specific results published in the prestigious journals and having independent parties confirm the value of the enterprise (stock analysts). These are major accomplishments. But, they do NOT speak-to-pie in the sky valuations. Thus, for this enterprise to rally we'll need a whopping rumor.
So, will the the share price rise or fall? Look at how the Company is doing. Is it doing enough to prevent further shorting by large hedge funds? That's the key.
You obviously are not focusing on the cost of the Trial. It is on hold. Why? Because they have run into a situation where they want to enlarge the focused area within the RPE channel. They do not want to incur more expense until the FDA either gives them a thumbs up to proceed with a larger definition of the target area or a thumbs down and they have to stay within the originally specified portion of the channel.
But, this halt is due to conserve cash. Every patient brought in requires a rental of the extremely expensive facility. Every school's physicians likewise have to be paid for their expertise and utilization of the instruments.
Further, let's discuss funding, shall we? Are you aware of the difficulty of the last funding(s)? Are you aware that they have in place language that requires ACTC to make whole prior funding sources? That in the last fundings, these amounted to 300 hundred million shares?
I don't care one whit about a reverse split. But, the next financing is going to kill this company's shareholders UNLESS extremely important, positive news is forthcoming. And I don't mean a lot of hoopla associated with mindless PRs. I'm talking about serious dollars and cents now.
I imagine that if the Company does a reverse split without news, they will lose 20% to 30% of their capitalized value off the top at the close of the 2nd or 3 business day after the RS. Why? Because this Company is sucking wind and is vulnerable to a bear raid. There's no momentum in the shares. Look at the last 6 months for the trend.
Let's say they do an 80:1 split. 8.4 cents times 80 = $6.72 a share. But without news, the shorts will jump in and start to look at dropping the shares below $5.00, a 25% haircut. This is the threshold for most biotech funds where they won't invest due to restrictions in their investment policies.
Then and only then if ACTC decides to get more funding, how much more of the Company do the common shareholders have to give up to get the funds??? How many additional shares have to be issued to prior funding folks to keep them whole?????
Sorry, but having this trial on hold (whether they admit it or not) is a real kick in the teeth for the common shareholder.
Let's see... Rabin has a set-in-stone shareholders meeting later this month. He has to have Lanza explain the status of the Phase I/II trial. They have to re-establish trial guidance in terms of completion. Secondly, they are running out of cash by year end.
Thus, the news Rabin has to announce is not great and he has to announce a reverse split.
Unless he announces a partnership with the Korean biotech that creates value, unless he announces a Chinese Partner that creates value, unless he can somehow come up with $50 million to fund next year, he is going to be swimming against a strong current on Wall Street.
I'm basically stating the obvious... it is time to pull a rabbit out of the hat, Mr. Rabin. And Dr. Lanza, you might be the all time greatest stemcell researcher; but, if you need "more time" to get it right, well, you will be hammered by the street.
Why the frosty tone? There have been a lot of shares bought in the mid-teens that are now only worth 1/2 of their purchase price. Of course shareholders are getting antsy.
I am a nuts and bolts sort of investor. I'm just not willing to say anything about the long run prospects of ACTC now. I'll tell you this, elysse1kittycat, I'm not nearly as optimistic as I was last Fall/Summer. Seeing this trial come to a grinding halt is very unfortunate.
Time is not the friend of a pre-product biotech. As we wait for whatever obstacles are blocking the pathway for ACTC to be either pushed aside or the trial moves around them, I must remind investors that this causes further shareholder pain down the road.
I am watching this team carefully to determine if I need to invest further into ACTC, fold up my tent and walk away, or just keep holding. This hold is now 3+ months old and counting. When will the CEO put out a press release to the public and SEC? If you do NOT have trial progress in 3 months, THAT IS A MATERIAL EVENT that requires a form 8 to be published.
At this point, I'm not going to wave a red flag. Perhaps we'll get more than a cursory explanation at the ASM? I'll definitely wait for Rabin's explanation. It better be good.
As to my opening thought, here's my thinking and experience. If you think that a Phase I/II trial is expensive wait for a real Phase II. The cost of consultants to work on behalf of the Company is very expensive. Typically this will be part of a contract signed by the service provider and ACTC.
This expense gets even much, much more expensive in a Phase III trial intended for becoming the basis of an application to the FDA for approving the therapy/drug/biologic. Nothing is free in today's biotech testing arena.
But, recall as I posted previously a few months back, the FDA demands 2 independent Phase III trials for creating a basis of approving applications. They want to see repeatability between 2 large groups of patients. We are talking about 500 patients per trial and not 12 in each trial.
Thus, if you think dilution is a factor now with a reverse split at hand, "... you ain't seen nothing, yet."
As time passes, the risk/return ratio deteriorates. The risk balloons and the returns dissapate. Here's why. If I'm a professional money man (I used to be one), and I see a Company unable to pay back my principal (cash flow), I'm going to demand shares of stock.... say 20% of the company. It will be in the form of convertible bonds with a large interest rate convertible into common shares. But, I am also going to attach any and all assets and place a lien on them to have at least something if the stock is worthless. Lastly, I am going to insist upon warrants to keep me whole if the Company tries to go around me and get more funding. If you thought the last pass through was expensive, I've got news for you, each and every succeeding round of financing for this Company is going to be more and more expensive to the point where it no longer makes and economic sense to proceed.
Thus, there are only so many times Management can go to the money well legally. I wouldn't invest on promises alone. I need proven success and time destroys that sense of success in my mind.
What I am saying for the rank and file here, look for hard evidence of progress made-- in terms of eyes shot, in terms of no complications/ eyes shot, in terms of the original time frame for the Phase I/II. If the Company fails to meet their objectives in a reasonable time... Think about my funding comments...
And Please, (And this is very, very important for some of you long time investors) DON'T fall in Love with a Company/product. That's not sound investing. Invest in a Company that produces results and meets expectations. It is that simple.
Question... any guesses when the annual shareholders meeting will take place? Where?
Buy on the rumor, sell on the news. Corollary... if you are a short and you believe that most equities fall in value with a reverse merger... it goes like this:
Sell on the rumor, buy on the news. This is completely backwards but, if you are a major short, we're in the rumor period.
Don't get flustered by this Street thinking. This isn't personal. It's just the way they do things.
This too will pass.
I think what is really going on is the confusion of the Reverse Merger and the major shorts already taking position and starting their selling programs. Realize that if you can locate shares to short, and you borrow them (market maker to market maker), that if the stock falls from 9.5 cents to 7.5 cents a share will make no impact on the liability of the seller.
It is purely mathmatical. If I "sell" a share first at 9.5 cents and I have 100,000 shares... I've received $9,500 on day 1. If the price drops to 7.5 cents on day 30 and the 80:1 reverse merger occurs on day 31, my liability to purchase back the shares stays the same.
$0.075 x 100,000 sh = $7,500. or 80 x $0.075 = $6.00 and 100,000/80 = 1250 shares. 6 x 1250 = $7,500.
Either way, my profit is $2,000 by being short at $0.095.
Thus, don't let the math throw you. The real reason to short is whether or not ACTC can bounce out of this tailspin. If you are long, you believe this is just another blip and an opportunity to buy cheaply. If you are a short, you think they will auger into the ground.
I happen to believe that ACTC will right their mission and their efforts will be stronger, quicker than the Street's expectation. I am sitting on my powder and fully believe that ACTC is worth much more than the current valuations. But I am going to let this reverse merger take its course.
As I have mentioned before, this is nothing but a beauty contest pre-approval. If the shorts think they can have a pay day by shorting ACTC, they will. The kicker is who would be purchasing ACTC shares AND why. Rabin is under pressure to have the business perform as previously discussed in the 4th Quarter. He did mention that the Phase I and II would be "Complete" by mid-year. Now, if he later discovered a need to get answers from the FDA and then sat on that development, ACTC will get hurt when that news is published.
CEO's of biotechs pre-approval are be-deviled by shareholders needing information. But, many times information is iterative and deceiving by corrupting investors expectations. And that's where we're at right now. We, as a stand alone body of investors, don't know what should be our expectation. That unto itself is a sign of further riskiness to someone thinking of buying shares.
I can easily see the price per share getting a 25% haircut if the Phase I/II trials are delayed by a half a year and 50% if they are delayed more than a year. And that is without dilution of another secondary.
I'm not trying to talk the price of shares down. I'm not a bear. I'm simply trying to describe the future of this Company given their lack of progress in the past 3 months and what will happen if there are compelling reasons to put the trial on hold while they try to amend things with the FDA.
Think of off-label as a boutique compared to the massive retail outlet. The cost of the therapy is crucial. We have no idea as to the costs and thus the frequency of outright purchase without insurance. That will be a 2014 issue. The FDA does look at "off-lable" uses of their drugs and if off-lable use passes a threshold, they will come down hard on the manufacturer. Case in point is the on-going war between the FDA and the vitamin/supplement market place.
Bottom line. Off lable use won't make a drug company successful. Only drugs approved by the FDA will make a company successful.
I feel that Dr. Langer was brought on to give Dr. Lanza a clear voice of reaction to the science. I'm VERY sure they have been collaborating like crazy to establish their pathway for not only the Dry AMD trial but all the other trials in the lab. I think of Dr. Langer as a Truth Teller. He would NOT have joined the advisory board if they were not going to give him broad lattitude of opinions for internal debate and direction. I would also mention that Dr. Lanza is the authority on Stemcell Research Worldwide. But that doesn't make him a guru for getting the science through the FDA maze.
Dr. Langer's clout is far reaching. But, first and foremost, he will need to promote the science in those "back channels". He must have been extremely excited about the science or he would have never been associated with ACTC. I don't think it is a far reach for him to "sponsor" the science along with Dr. Lanza.
Have confidence in the science but, play it cool with regards to the FDA. They are indeed a wild card and can have their own agenda.
If what you say is correct and let's say that the scientists are all in support of broadening the definition of acceptable patients in order to gain efficacy down the road, the FDA has been historically critical of trial design changes. In later trials it is called "data mining". That is, to gain an efficacy, scientists take the first results and realize that they have better information and want to change the trial. And the easiest way to achieve your targeted efficacy is to redesign the trail. Sorry, this is a common problem in biotechs.
Worst case... the FDA in their best iconoclastic communication will respond to the petitioner (ACTC) to terminate their existing trial and resubmit an application for the revised trial with specific scientific reasons for changing the trial. The FDA will be very, very leary of granting a new trial worrying that the Company is simply grasping at straws. Thus, the bureacracy can force a significant delay in the progress of the biotech in completing this stage of testing.
The other problem with a material design changes can occure when the scientists take the results from a Phase I trial and change the parameters significantly to achieve what they learned from the Phase I/II and apply it to their trial design request at the Phase II or Phase III level.
The FDA requires an application from the scientists to begin a new phase. During this review, they look at the trial design and try to determine that the safety aspects of the previous trial still applies. Again, worst case: the FDA personnel would be very hesitant to allow changes post safety trial to broaden the scope of the trial and could re-order a new Phase I/II trial to give them sufficient comfort that there are no unnecessary risks to humans.
The Bruches' membrane might not be a show stopper as the above discusses. But, the longer it takes for the FDA to respond, the more money will be burned by ACTC just to stay alive.
Again, money burning is the enemy of a pre-approval biotech. And now you now know why ACTC hired the additional the top consulting scientists late last year to form an internal review board. Hopefully, these additional experts can use back channels to influence the FDA to grant Rabin's request without stopping the trial.
Best case: The FDA allows for the expansion of the definition of the disease so that they get more patients that will be available for treatment.
Listing on the NASDAQ... Is this a panacea for all ACTC's ills?
Why are they not shooting eyes left and right? They already announced that they didn't have any complications from unattached cells. Is there a serious biological or legal obstacle that is not being disclosed to the public? The longer it takes to start getting their cohorts completed, the more the street will twitter that these guys are dead in the water.
I'm still long with ACTC but it seems this Company has gone no where for 3 months. I have got to say that this hiatus in progress is rather nerve-wracking.
Getting the stock price up to a tradeable level via a reverse merger without significant Trial progress is inviting all of the common shareholders into a slaughterhouse of shorting.
While I am not a short, I lived through 7 years of Dendreon manipulation. The short side of the National Market is huge, unfortunately. If you think you are on fumes now, wait until the stock gets priced over $5 or $10 through a reversal only to see a 20% or more carved out from a bear raid. It will drive you mad.
The only way this Company's stock price will move upward is if there's significant progress on the Phase I/II Trial WITHOUT complications. Be that biological or product liability insurance, or any other possible road block.
They won't be allowed to market this procedure for insurance reimbursement in the USA without full and complete approval by the FDA. Thus, if there is a road block (and I'm not saying there is), their only path forward is through Korea or China.
Rabin and his boys had better come clean quickly or this stock will be a sitting duck and not an investment.
All the above is strictly my opinion.
Watch and learn. As I said, Rabin's reverse size is purely mathmatical. It is the funding needs of this business that dominate. What drives the cash drain? THE LACK OF REAL PROGRESS in injecting eyes. Who will provide fresh cash into this business if they perceive the lack of progress in this initial trial? Why is it so slow?
Additionally, existing shareholders will demand answers on 1) how much more cash the company needs just to be a going-concern 2) how much more cash the company needs just to complete the Phase I/II Trial and submit it to the FDA and get the go-ahead for the next phase.
I'm afraid all here need to learn just how expensive these trials both domestically and internationally will be. So far it is a complete unknown. That London injection was a Class A publicity stunt.
As an investor in this debacle, I want specifics as to when this very first trial is expected to be completed. And don't give us BS about June 1... not unless they happen to inject ALL remaining participants all at once. But then, try to get that past the FDA. No, I'm not seeing progress.
As a result, I expect this stock to continue to get hammered down to the $0.05 range. Take your outrage where it rightfully belongs... to CEO Rabin.