Bourbon, what analysis indicates to you that dilution is likely to be 100%-200%? What are your assumptions about cash burn and the timing of events that could move the pps, etc.?
My view that 33% dilution is possible assumes no new partnership of significance or significant payments on current partnerships in the next 12 months. Here's my analysis:
Cash on hand July 31 = $90M. Cash burn looks to be ~$9M/mo, but I'd expect Lombardo to get that down to ~$8M/mo or less. Let's say ADXS spent $16M in August and September, so they now have $74M cash. That means they have ~10 months of cash, but they also show $10M revenue for 9 months. Let's assume that's cash income, so assume $1M/ month (probably payments from partners, so this income forecast may be off). Let's give them, then, 10 months of runway from October 1, 2017. To me, you should never raise funds with less than 6 months of cash, so that gives ADXS ~4 months to get more funding.
There are 3 or 4 events that should happen in the next 3-4 months that could drive pps to $10+: EU MAA filing and three trial prelim data readouts if these are positive.
As for financing, there can be many different scenarios, but let me suggest one hypothetical that I think is not unreasonable. Let's assume a market value of $10/sh based on "good news" in the next few months. Let's assume funding would be at $8.00/sh for 20M shs (33% dilution). That would result in $160M raised which should carry them into mid-2019 when interim readout from AIM2CERV should occur (as well as other Ph 1-2 trial results along the way). If that data is positive, ADXS is on its way to a multi-billion market cap.
And, of course, lots of good and bad things can happen between now and funding and between now and AIM2CERV results.
If we don't get the EU MAA filed and if we don't get encouraging trial results in a timely way, then I agree a 100% dilution (40M new shares) could result. That would be painful but might not totally eviscerate current investors IF trial results, especially AIM2CERV are positive in due course. 200% dilution? Well, that's a disaster scenario, I agree, but I do not think it likely or I wouldn't be invested.
So, anything is possible and we should know a lot in the next 3-4 months. I'm betting we catch our second wind and look forward to new funding, however it is raised. Unlike some, I don't believe partnering is necessarily the best way to raise funds to maximize future value for current shareholders. It can be, but not is not the default "go to." Equity capital can be a better deal....it all depends.
