Marker Therapeutics Inc (MRKR)

[Phantom Lord]

It is entirely going to depend on how Marker manages this deal. I’ve said previously that they have cash out to August of next year and are going to try to get the lymphoma trial up and running as soon as possible with the intent of having the first data readout by the end of next year. I got the feeling that they expect that trial to bring some attention and they would most likely do a larger offering upon that data release should the share price increase enough. The announcement of the lymphoma IND acceptance brought in a very large amount of volume so they could be on the right track here. If that is indeed the plan, then they need cash from August to the end of the year totaling around $10M-$15M. They now have access to that with this deal and don’t need to rush a secondary offering.

That being said, they were clearly not negotiating from a position of power here. The Lincoln Park Capital (LPC) deal is very similar to the deal they had with Aspire (PR, 8k) which expired in September of this year. That one was for $30M over a 30-month period. For what it’s worth they only took $6.2M from it. They issued Aspire commitment shares totaling ~.7% of outstanding shares at the time to get the deal in place. The LPC deal (PR, 8k) is for $25M over a 24-month period. They issued LPC commitment shares totaling ~2% of outstanding shares. So, the LPC deal is for less money, a shorter term, and they had to give up more than double the amount of ownership they gave to Aspire just to get the deal in place.

LPC does A LOT of these types of deals, and I can’t say I would hold them in high regard. They commit to purchasing up to a set amount and for that commitment are granted free shares. The free shares themselves aren’t the issue as they clearly should get something for entering such a deal where they have no control over when or at what price they will need to buy. The issue is what they do with the shares after purchase. Best case scenario they hang onto them and become a long-term holder. Marker tried to address this in the PR in stating that they “entered into a Common Stock Purchase… with Lincoln Park Capital Fund, a Chicago-based institutional investor and long-term Marker shareholder.” I have found no filing to indicate LPC holds, or has held, any shares of MRKR. HERE is the list of their filings from the past 5 years. So, they either don’t meet requirements that would make them file with the SEC, or they are not a long-term holder of MRKR. I do hope it’s the first one. The companies entering these deals with LPC rarely fare well. I don’t know much about those companies but the only thing I would be comfortable assuming is that the companies entering these deals with LPC are already hurting and this is just a last resort deal. LPC are a bunch of vultures, circling, waiting to pick over the rotting corpses of failing companies. Some turn things around but a lot of them continue to flounder. Knowing what I know about Marker I believe things will turn out differently for them but I would have rather they not associated themselves with LPC.

In any event, the worst-case scenario, since they are purchasing the shares at a discount, they immediately dump them. They take a very small profit, but they aren’t risking anything themselves. This causes downward pressure on the share price depending on how many shares they have and how quick they try to unload them. Ultimately this wouldn’t be much different from the company just tapping their ATM. Volume has been fairly anemic though so hopefully they will have a hard time unloading.

Like I first said, this really just depends on how the company manages the deal. The funds are secured, and they don’t need any until August at the latest. This just assures them that they will be able to get the funds when needed without needing to do a large secondary offering. It doesn’t even mean they will need to access funds under this deal. If share price appreciates enough, they will probably still do an offering without fully exercising this deal. Just like how they did an offering early last year while leaving $24M untouched on the Aspire deal.

Ultimately the deal means nothing if they don’t produce data. We’re headed for a reverse split that they will need news to counteract the negative effects of and I just don’t know that they have it. Back in the beginning of the year when they delayed the AML trial, I said they will be backing themselves into a corner that will cause short term pain. Well, here we are. This funding deal will definitely provide them with flexibility but it’s not a deal I would want to have to fall back on with how things are currently going for the company.