yes, it is dilutive, but not too badly. The $1.90 warrants were already issued, and in the money, so this action effectively just quickened VRNG's receipt of the $10 million. In exchange, 5 million shares of new warrants were issued but significantly out of the money, and with a one year expiry. So, if Vringo succeeds in the next 12 months, the offering would be mildly dilutive (and generate another $25 million in cash). If VRNG is not successful in the next year, there will be no dilutive effects, and in fact VRNG would have had the benefit of being able to get cash cheaper and faster than through other methods.

I think this was a great move.

looks like $250,000 in revenue for the quarter. Not clear if its a one time payment, or the first of many....

One other thing on the proxy....management seems to have been rewarded with a boatload of options last year. However, a vast majority of those options are exercisable at 3.72/share, meaning they, too, are underwater. And management salaries are relatively low (when compared to other public company C level management, and big city, big firm lawyers). Based on my read, it's tough to say management isn't aligning their interests with we shareholders. They make very little until the stock shoots past $4-5/share.

I think you are all a little off....my understanding is that the intangible asset value booked would be anything over the cost of the acquisition. Since we didnt actually "pay" for the patents, assigning them a value is somewhat arbitrary, so my guess is it will be an intangible asset on the balance sheet, but that value is probably close to zero. And whatever the asset is valued at will show up on the income statement as revenue.

Much like the software Lang is allegedly developing, that "asset" has no verifiable value, and has not been carried on the balance sheet (while the expenses associated with that development have hit the income statement as expenses.

In short, with no real way to assign a value to these patents, my assumption is that there is little if any revenue and little if any adjustment to the balance sheet.

note: that DOESNT mean the patents have no value....just that they so far as we know, the "cost" of the patents is close to zero, and accounting books assets as the lower of cost or market value.

I believe your burn does not exclude non-cash stock compensation expenses, so they end up with another month or so of cash.

One would only need to pledge $500K in collateral to participate. While I realize that is still a substantial amount of money, pledging assets against a loan that a) may never be drawn, and b) would hopefully be repaid by the company itself is a less capital intensive option for investors (and therefore, offers a lower return). Given these facts, perhaps more people would be able to participate.

I see no reason why this couldn't happen. Perhaps there would be some regulation on the guarantors (need to meet the definition of accredited investors and be limited to some small-ish number of participants for simplicity's sake), but the ultimate dynamics woudl be Cortex would get a bank loan guaranteed by a few indiviuals. The bank would have little risk as tehir exposure would be covered by the guarantees. Companies get financing like this all of the time.

Concept for the Board to consider....

Cortex should be able to get a deal done at some point in the near future. Per Neuro's comments, perhaps not as quickly as we'd like, but I would assume that even under the worst set of circumstances, they could close on something by June. That leaves the company with a cash shortfall of $3 million or so. A $3 million PIPE would dilute us by at least 6+ million shares (or more than 12%). Perhaps a handful of shareholders could post cash to guarantee a loan to Cortex, wheras we could become senior secured lenders, effectively guaranteeing Cortex's debt of up to $3 million, in exchange for warrants (I'm guessing 30-50% warrant coverage is about market). Cortex gets its insurance and an extra 3 months, participating investors get some upside, and all investors get less diluted. Any takers? 6 folks at $500k each?

With just under $7 million in cash and burning about a million per month, Cortex has until April before they are out of money. That's about the same time that their annual report/audit will come out, so as long as they raise money by then, all is fine.

I work in the Venture industry, and know that a) valuations are pitiful, b) lots of early stage companies are in trouble, and c) investors are somewhat frantic as there is no source of capital for developing drugs (remember that IPOs arent liquidity events for biotechs like they are for tech....they are just a later stage funding source).

All that being said, Cortex has a drug in phase II with positive results, a pipeline (multiple shots on goal), and demonstrated success to some degree (though not clean) in multiple indications. Their market cap (at $0.60/share) less cash gives them a technology value of less than $20 million. While this is not completely unheard of in today's marketplace, I'd argue it is on the low side of valuations and that things shouldnt get a whole lot worse. I see series A companies with far less clinical success getting funded at higher valuations.

For what it's worth, as of this writing, yahoo lists only 104 stocks on the entire NYSE and NASDAQ as being up right now.

I'm assuming management has, at this point, at least an idea of how the RD-1 trial turned out. If we dont get news tomorrow, which would in my mind be the best time to try to burry bad results before the long weeekend, I'm guessing the risk levels start coming down. Thoughts?

The accounting letter, or "going concern" qualification, would only be applicable in an audit, so they likely wouldn't have to deal with that until Feb-March of next year (based on December numbers and subject to any post-year end liquidity events that may have occured). The accountants would want to see the company has at least a year's worth of cash or vertually certain financing at the time of their opinion. The low cash balances would be a concern, and you're probably right about the$5 million barrier being crosed in October/November, but that in its own right is not a disclosable event, nor does it trigger an accounting opinion.

The IND has not yet been filed.

Per the prospectus dated today, "In July 2007, the FDA, upon review of the additional data, indicated that we may resume our previously approved clinical trials with CX717 in Alzheimer’s disease at all requested dose levels. During the third quarter of 2007, we intend to file an Investigational New Drug Application for CX717 with the FDA’s Division of Psychiatry Products to allow us to initiate a Phase IIb study evaluating CX717 for the treatment of ADHD."

One other mid-day thought here....

COR now has a market cap of about $92 million (based on 47 million shares now outstanding), and cash of $25 million. That leaves the enterprise value, the value of the science and the platform, at about $60 million. This is a no-brainer. As frustrating as today is, and as overinvested as I already am in this stock, I can't help but buy a bit more today.

"think of yourself as you go through life as standing at the plate and people throwing you pitches. It is a very special baseball game. There is no one calling the balls and strikes and you can stand there forever. You have got all these people in the bleachers saying, "Hey, swing you bum!" on every second pitch. You just have to learn to ignore them and when a pitch comes along and it is straight but it is a little high inside, you let it pass. Another one comes along and it is a little low outside. Every once in a while a pitch comes along that looks like the sweetest, juiciest, fattest pitch you are ever going to see. And when it does, you swing from your heels on it. You come out of your shoes on it. That is how you go through life. And you are only going to get about ten swings like that, maybe five swings. That is what you wait for. Too many people go through life batting at every other pitch. So just wait for your opportunities and when they come you swing from your heels"

I don't think it is. If a pharma were to take a position in COR, it would most likely be in conjunction with a partnership agreement of some sort, not through a low-priced PIPE.

Tony...don't get me wrong. My average cost is considerably higher than today's price, and I have a signicant position. I am very disappointed in the terms of the deal. I hope that the promised conference call will shed some light on the rationale.

But Stoll does ahve a ton of options, many of which are in the money. And the best I can tell from SEC filings, he has not executed and sold one share. His pain, from that perspective, is the same as ours.

Patco,

We were told we had enough cash to get INTO 2008, not through it.

Again, I'm as frustrated as anyone here, and disagree with the timing here, too.

But it's likely not the end of the world as we know it. And, while I'll confess that Stoll's actions with this fundraising are questionable, I will say that he has not sold one share of his stock or exercised an option, so he's at least feeling some of the same pain we are.

The underwriter was JMP, Not JP Morgan.

Altogether, this is extremely disappoionting, but potentially necessary. One would certainly have hoped for better terms on this financing than a 25% discount to market value and warrants....

At this price, it's too low to sell, but I, too, am frustrated by management's decisions here....

Looks like an unlimited supply of stock beiong offered at 1.95....a PIPEr selling stock at cost and keeping the free warrants?

I'm pretty sure you are correct. Accountants' opinions are issued only with audits, which for most companies would occur annually. The next opportunity for an opinion would normally be with the 12/31/07 numbers, and that report doesn't need to be filed until the the 10-K is due at end of March. So, Tony, the company would not need to demonstrate having a year's worth of cash until the Feb-March 2008 timeframe.

Looks like at least SOME of the activity is from warrant exercises. The below is from a filing from the Company today....

Basso Private Opportunities Holding Fund Ltd. sold 133,334 shares.


Over the past 11 days, the stock has gone down sixty-ish cent or so, 25%, on volume of just around 2 million shares. Volume is no higher than normal....and with not a lot of buyers in biotech or the market at this point in time, a few extra hundred thousand shares of supply seems more able than usual to move the price lower, faster.

It's frustrating to sit through, but equilibrium will return, and the Company's story will hopefully speak for itseld and reward we long-suffering longs.

In short, this sucks but seems to have a rational explanation...

"tightening credit may also decrease the likelihood of a COR buy-out."

Given all the cash Big Pharma is sitting on, I doubt that. Cortex isn't an LBO/PE buyout candidate.

We're now back at pre-announcement levels. I'm not a chartist, but it seems we have now "filled the gap" from the original dosing-lifted news. Its a bad market, no buyers, and significant sellers from a) warrants, b) people who bought for the pop that never really materialized or during the pop that are now 15% underwater, c) frustrated longs tired of waiting., and d) folks GFP has managed to scare with his dead-horse beating questions. I'm WAY overweighted in COR, but the risk-reward profile has really never looked better. I'm a buyer of more today at 2.76, and hoping the second half of the year will bring more news under better market conditions to see some of the promise of this "little gem" fulfilled.

I forgot it was a half a trading day today, and got freaked out when I saw a huge gap between the bid and the ask and no trading at 1 o'clock. Anxious times for we COR longs...

let's also remember that about half of today's volume was in the early part of the day when the stock briefly crossed $3.00....

On another note, slightly off topic, below please find a great link to a PWC report on Big Pharma and the future. Great reading material....

http://www.pwc.com/gx/eng/about/ind/pharma/pharma2020final.pdf

They are requesting adding 2,500,000 shares to the option pool, which, if fully granted, would result in a new 2,500,000 shares out of about 60,000,000 currently outstanding shares (40,000,000 outstanding, and 20,000,000 or so in warrants and options). So, the additional shares represent about 4% dilution.

A further note....in 2006, Stoll got options for 300,000 shares representing a value (black sholes) of just over $500,000. That doesn't seem too out of whack for executive management these days.

Note: I'm not a schill....I realize $800K+ per year is a ton of compensation...it's just not out of the ordinary these days for CEOs.


Final note: As to timing, proxy statements usually come after the fiscal year end and before the annual shareholder meetings. Ammendments to option plans require a shareholder vote, which most companies undertake with their annual proxy votes. Most 12/31 year end companies issue proxies and make similar requests at this time of the year. I doubt there is anything relevant in the timing other than it is just that time of the year.

We really can't expect management to give themselves no additional options (every puiblic company gives management some incentive on an anual basis). Additionally, the increase in the option pool by 2,500,000 shares doesn't mean all will be allocated/granted immediately. Finally, even if all of the options were granted on day 1, the dilution on today's share count (fully diluted) would be just over 4%. I think the 9% drop in share price today is overdone even under the worst possible dilution scenario (assuming the proposed increase to the option pool is the driver).

strange action this morning....seems like there is a 250,000 bid at 1.66 and a 125,000 share block for sale at 1.69. Two of the bigger blocks I've seen in a while here.....

point of clarification....Generally, departing employees do not keep their options...they must either exercise within 30-90 days of departure, or forfeit them. And as most of Hank's (and everyone's) options are currently underwater, it is unlikely any would be exercised. Now, management may have cut a deal here in exchange for continued cooperation, but the norm is that options do not follow departing management.

The math and the market make little sense to me, and I picked up some more shares yesterday.

Here is the math....Tuesday, with about 34 million shares outstanding, the company had a market cap of about $45 million, and an enterprise value (less cash) of about $35 million.

Post finacning, as of the close of the market yesterday and based on 39 million shares outstanding, the company had a market cap under $42 million, and an enterprise value of less than $27 million.

I don't love the terms of the financing either, but I trust management that these were the best terms they could get, and they need the money.

But with the positive implications that they didn't raise more money and that the FDA submission is continuing, and the uncertainty of a financing now behind us, I see no reason why the market's reaction was not postivie, never mind so negative.

So going back to the math, with the positive implications of yesterday's announcement, the intrinsic value of the company dropped by $8 million. I think that is preposterous.

Let's also remember, the warrants (as with all of the warrants issued to date, and all of management's options at this point as well) are not truly dilutive until they are in the money. The warrants issued yesterday would raise Cortex another $5 million when the stock appreciates by roughly 55%. Again, until then, the transaction is not dilutive.

This is the worst performing investment I have every made. And against all discipline, I am adding to my position at these levels. The numbers just make me believe the market is wrong on this one....

As a long suffering long, I hope I can maintain some level of dispassionate analysis. But again, despite all of the problems with Cortex and the possible demise of CX 717, I can’t help but believe that the valuation as of the close of business Friday is ridiculous.

Ampakines are a platform with a ton of potential. They have demonstrated some efficacy in man. And the science seems to be of interest to a number of big and mid-sized phramas in one way or another.

Yet, with a market cap of just about $44 million, and $10 million in cash, the enterprise value here of less than $35 million is astounding.

That enterprise value is representative of less than 50% of the cash that has been invested directly into the company (through stock offerings and option exercise).

That enterprise value is a fraction of what far less promising platforms with far less clinical success are getting in the private markets from venture capitalists.

That enterprise value, for a company with a drug in phase II (but with some safety concerns), another drug in phase II with a partner, and an IP estate that could hold billion dollar market potential, seems way too low.

I’m currently down well into the high-five figures on my investment here. And I understand there is risk. But either this is the buying opportunity of a lifetime, or a foolish love affair with a stock that the market can’t stand.

Thoughts on the valuation?

After the bloodletting a few weeks ago, I held my position and decided to not look a the stock price quite so often. However, this weekend, the following hit me:

a)We have 33 million shares outstanding, and 17 million warrants with exercise prices around $2.85 or so on average.

b)We have upcoming data possible from Organon on the SZ phase II, some hope of a upward revision of the dosing for ADHD in the spring, and, if nothing else, significantly more validation of the ampakine platform than we’ve ever had before.

I can’t help but feel this stock price, and the current enterprise value of $40 million, are significantly understating the value of the platform. And, using the same metrics, a $4 per share buyout would cost the acquirer only about $140 million (33 million at $4, and 17 million at $1.15, less cash on the balance sheet).

We may have more down days ahead, but at some point, the promise of this platform and the successes it has achieved to date should result in a more substantial valuation.

Dr. Tracy has posted a summary at http://www.neuroinvestment.com/CORXcom.html

Given the facts as they appear today, Neuro, and in light of a probable sell-off tomorrow morning, I'm curious as to your opinion of a fair value for the stock right now. Thanks in advance.

I can only imagine this is good, if not neutral news. That things remain on track is certainly a positive. A question for the board....would COrtex need to state as a material event that some of the histopathology studies had negative findings if they did? Or oculd the info be all negative and still submitted to the FDA with no hope fo the data allowing the hold to be released?

Thanks in advance.