GTC Biotherapeutics (fka GTCB)

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Good recap on ymb for quick explanation
completely my view as well 100%
all 100% in line with gtcb policy and the policy newberry has communicated and confirmed last summer on multiple occasions

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The recent agreement (JV) between GTCB and LBF is dilutive, causing GTCB's shares to slide back after an initial pop.

To me, the major issue is not dilution per se, but what GTCB's shareholders get for the (20%) dilution?

To answer this question, one must first understand that LFB's parent is a (large) French state-owned company whose primary business is the production and distribution of plasma proteins derived from human blood.

The very existence of the GTCB-LFB agreement is a recognition on the part of LFB that GTCB's transgenic production platform is a superior (faster, cheaper, safer) way to produce plasma proteins, of which there are about 100 kinds.

The agreement calls for a 15-year (renewable) JV to "marry" LBF's experience in clinical development and regulatory review to GTCB's transgenic production platform. The first product will be Human Factor VIIa, which is already under development by LFB. LFB will have exclusive commercial rights to this product in Europe, and GTCB will have those rights in North America. For the rest of the world, and for all other products (both plasma proteins and monoclonal antibodies or MABs) they choose to develop, costs and profits will be split evenly, though there is a clause that allows for non 50-50 split of profits if one of the parties does not contribute to 50% of the costs.

Rather than simply outsource its (production) technology (to LBF), GTCB has chosen to partner with a major European company. As a result, the risks are higher (development costs + non-approvals of products), but the reward (as a percentage) of sales is also much higher, especially if compared to royalties had GTCB simply been chosen by LBF as the "fab" for its plasma proteins and MABs. In short, this deal by GTCB is an effort by GTCB to move "upstream" into a higher value-added market via a JV that will codevelop and distribute blood plasma proteins and MABs with a major European player.

There's no way to calculate if such a deal is worth a 20% dilution, but it certainly represents a another major validation of the potential value of GTCB.