GTC Biotherapeutics (fka GTCB)

[DewDiligence]

Hostile takeover not likely:

>What stops the acquisition of GTCB at these low prices? Are we "protected" in some way?<

Hostile takeovers in biotech almost never happen. Biotech firms typically posses a lot of “human capital” (e.g. Dr. Harry Meade) and people can simply walk after a buyout. Thus, prospective suitors would be taking a huge risk in trying to pull off a hostile takeover; if they succeeded, they might end up with a pharm and a lab with no one who knows how to run them.

Massachusetts corporate statutes provide additional shareholder protection from a hostile takeover. This is not to say that a hostile takeover can’t possibly happen, but it’s very low on the list of things a GTC investor should be concerned about, IMO.

>And was this the reference to the 19.9% regarding recent structure of deal with LFB?<

19.9% is a standard equity stake for a strategic partner to take in a not-yet-profitable enterprise. The reason is that a 20% stake triggers pro rata accounting of profits and losses on the holder’s own income statement. I.e., if LFB were to acquire 20% of GTC instead of 19.9%, they would have to record 20% of GTC’s operating losses on LFB’s own income statement, which would reduce LFB’s reported profitability. Regards, Dew