This offering was a bit of a gut punch since we were really taking off. But I am not reading too much into it. I was in this for the long-term, and on the whole the last month has had several positives.
Few thoughts on secondary offering:
- Between NanoCarrier deal ($15M upfront) and offering ($18.75M), VBLT has essentially doubled their cash on hand (+$33.75M). That is significant.
- I think we all knew an offering was very likely coming. If you look at any of the past earnings reports they used very deliberate language. Here is from 2017Q2 update as example:
We expect that our cash, cash equivalents and short-term bank deposits will enable us to fund our operating expenses and capital expenditure requirements into 2019 and is expected to be sufficient to enable us to complete our on-going Phase 3 clinical trial of VB-111 in rGBM, to support our planned potential registrational trial in ovarian cancer and an exploratory clinical study of VB-111 in combination with a checkpoint inhibitor in lung cancer, as well as to support the launch of our new Modiin facility.
Notice they say position will help them complete rGBM, but only support OVCA. Ph3 is expensive, and working capital of $31-34M would not cut it for everything that they have planned for the next 3 years.
- There is never a good time to dilute, but this might be one of the least worst times. There are still the (1) Ph3 PrOC announcement, (2) Ph1 VB111+PD1 announcement, and (3) and several Jan/Feb investor conferences, which could all potentially increase stock price prior to Ph3 GLOBE results. I would rather get the dilution out of way now and then potentially have uninterrupted excellent news. If they waited until after Ph3 readout to dilute, whether good results or otherwise, reaction could be worse.
- It seems wise to have significant cash on-hand even after Ph3 approval of a first/best-in-class drug. VBLT should position themselves to not be the victims of undervaluing (ie. immense shorting, hostile takeover, etc). SGYP did not plan ahead, so I got into them at what I thought was the bottom following a dilution post-Ph3 approval. They have done nothing but ineffectively piecemeal their way through a strategy to go it alone. Their failures have been painful and epic. Better to just do it right from the start.
(Side note: @ValueInvestor, find me on ST if you want a private convo about SGYP. Same name as here. But in short, their drug is best-in-class, they received huge insurance coverage wins for 2018 to expand market share, but their leadership are short-sighted liars. I would not recommend getting in now. There are probably better choices.)
AI
