A few additional IPO thoughts…
One possibility that seems off the table would be for Musick and Zamora to cash out as part of this deal. They jointly own almost 40% of the current stock between them, which expands to around 70% if you toss in options and warrants (this is based on data in the prospectus, not my own guesswork). If they sold, it would change the overall calculus of the IPO considerably. But it would have to be stated in the prospectus, and I don’t see it. This is an unsettling situation AFAIC. First, I don’t know how Zamora got away with what he did in general. Unless I’m missing something big, he robbed the store. There has to be a story in there. But that aside, that kind of inside control of the company has to be an issue when selling the IPO. Plus, both guys are on the Board. The Board only has one independent member – a situation that, again, might be troubling to IPO investors.
The company managing the IPO, ThinkEquity, is a bottom tier investment bank. By that, I mean that, on average, their IPOs have lost over 60% of their initial value this year. I’m sure that number is skewed by a lousy market. But it is also not very good in a relative sense. We are not dealing with an elite player here, although I’m sure they know how to do an IPO. If they get it back to trading without destroying legacy investors, that will be good enough.
Personnel loose ends… Evans is now a well-paid consultant to the company. Tiana States appears to be the same Tiana who has been making important things happen in the lab for the past decade. I guess she got married along the way.
Generally speaking, the insiders have treated themselves exceptionally well over the past two years. If you’re going to be critical of VB, I think this is the area where they deserve it most. The $200,000+ salaries and stock options were flowing like cheap wine for a while there. It smells, to be honest.
None of this will matter if VB’s clinical trials produce positive results. That is game, set and match at this point. If they move to Phase II/III on one of them, the share price will soar. But it’s a huge if.
All that said, there is an excellent chance that the stock will be on the market again soon, and we will all have some liquidity. Based on all the factors stated, I expect the stock price to take a substantial dip post-IPO. I seriously doubt that my ideal scenario in the near term will happen – i.e., enough of a price pop that I can get my money out and still have substantial house money left in the game. Short of that, I am planning to let it ride. I’ve been in this for over 15 years, so there is no point in getting cold feet at this stage. Just understand that the most likely outcome at this point, based on how most stories like this go, is they burn through the IPO dollars without FDA traction and then need to dilute further. $17 million dollars doesn’t go very far, particularly with how they are now paying themselves.
Bottom line: This is quickly shaping up as a short-term gamble on the efficacy of the product itself. If your appetite for further risk is limited, or you need to recover the $ that you invested, you would be well advised to take any exit ramp that materializes.
