The Deb Ball: Time for an Investment Banker
Jake, my own speculation goes in the same direction as your post, except I would substitute an Investment Banker for your “friendly suitor.” IBs play this role all the time.
IMO, the timing is perfect now for bringing on an IB who can (1) buy in the open market as clinical news is released in the coming weeks, (2) drive the stock to the $1.50 level and, most importantly, (3) keep it there through market stabilization practices until the shorts realize they’ve been had by the IB gorilla now sitting on our side of the table and are forced to cover.
Of course the IB would be aided by analyst coverage from its own biotech person who tells the Peregrine story for the first time in a credible and comprehensive way that then leads to general media stories.
This is a classic role for IBs to play. As young debutante companies become eligible for wider market attention, it is most often an IB who escorts them to the coming-out ball. As all of us know, Peregrine is now ripe for such market attention.
I agree, Jake, that the IB could be picking up a few cheap shares in the market right now in anticipation of the coming-out party, but IMO a more likely scenario is that the Company uses shares from its shelf registration to pay for the IB’s escort services. Once the IB has done its diligence and confirmed the steady stream of clinical news the Company will have over the next six months (i.e. two or three Bavi Ph II cancer trials, HIV co-infection trial, HCV combo trial and Cotara Ph II GBM trial), it’s a no-brainer for the IB to buy $15 million of the shelf registration at $1.00 per share, drive the price to $1.50 in the open market and keep it there until after the shorts have been forced to cover.
I am hoping the Company won’t have to sell more than $15 million worth of cheap shares to the IB. I would like to believe $10-15 million is all the extra cash we will need after counting Avid’s growing revenues and the funds coming in from regional financing deals that pay for the cost of the Indian Cotara trial and the Indian Bavi PH II trials.
I am also hoping that any warrant coverage required by the IB will only kick in if the price of the stock one year from now is below $3. Hopefully the deal would be structured so the IB’s warrant coverage never kicks in because the $15 million of our shelf it buys next week at $1.00 has to be held for 12 months and the warrants disappear if the pps is north of $3 a year from now.
That would be a cool $30 million profit for the IB over 12 months. That should be enough to cover the analyst’s work for a year and several coming-out media events this summer.
In the past, the cost of bringing on an IB was just too high compared to the benefit. Now, however, with so much important clinical news coming out over the next six months, the Company has the strength to pick it’s IB and negotiate a fair deal.
Never has a pretty debutante ever been so ready for her coming-out party.
All IMO.
AI
