Re prior post, I decided to skim it quickly. It strikes me as a final shot at satisfying the company's pressing needs. (1) They need some money to start the clinical trials (without which, it’s game over and lights out), and, (2) based on this and prior filings, they apparently have a group of investors and former insiders who are pressing hard for a liquidity event. After the last IPO attempt failed, they were previously going to satisfy the latter by listing the shares and letting the market set a price. Apparently that plan failed, like everything else.they've tried. So now they're doing a two-pronged attack, where they do a bare minimum IPO to raise modest funding, and they let this privileged group of investors sell their stock separately (after some accounting gyrations to create the stock). The result, if it all works out, is a stock price of 5 or 6 bucks a share on the NYSE American. The elite group of prior investors presumably doesn't sue them (I imagine that’s in writing somewhere), and they raise 4 million or so to do the clinical trials.
The problem with all of these plans is that nobody has ever heard of this company, in large part because: they do no PR; the various CEOs have done no media or public appearances; and there is no buzz, and no awareness of what they even do. For any IPO or fundraising of any kind to work, there has to be awareness of what you do. This company has done nothing to create that awareness. They seem to expect that people will suddenly buy their shares because... well, I have no idea why they would expect that. My sense is that this plan will fail like all the others, due to lack of demand for the shares. But let's hope I'm wrong. This is the bare minimum offer they can execute that keeps most pink sheet investors whole while generating anything close to the cash they need to do the clinical trials. If this fails, I have to assume that it's game over.
Even if things go right, I do not expect any significant appreciation of the share price for a while, until (1) one or both clinical trials have encouraging Phase 1/2 results, and (2) the expected sell-off from the privileged investors is absorbed by the market. Good luck with the latter – I expect the SP to plunge initially, with a possible quick exile to the OTC markets. More specifically, it doesn’t say this specifically, but I suspect that Dr. Z will suddenly have a couple million fungible shares. And if you don’t think that dude will be cashing out ASAP, I have a bridge to sell you. If he can sell a couple million shares for a buck each, I imagine he would do that. But who knows -- this is speculation.
The only hope for longer-term, legacy investors (like me) is that the IPO actually succeeds and the clinical trials go exceptionally well. Given the very, very small float, any tailwind like this could, and probably would, send the share price to $20 or more based on pure speculation. My advice is to hope the IPO happens, prepare to ride out the inevitable sell-off from former insiders and their girlfriends and nieces, and hope that at least one of the two trials goes well. We will all make money if that happens, possibly a lot of money. But a lot has to go right. Honestly, I think the science end of it is a decent bet, as I think their underlying product proposition is solid and compelling. Whether they can convince the investment community to supply the capital to prove it is a much more tenuous proposition, particularly given their abysmal communication strategy (or total lack thereof).
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