RPRX - Since the stated aim of the management of RPRX is to sell the company, after derisking, I would take y'days PR as a definite positive, particularly after taking into consideration where the market cap for the company currently is, for the following reasons.
1) The approval of the new indication of anemia. Few would have expected acceptance for this indication. When the approval of this indication itself was doubtful, what is the concern regarding the need for a new IND? And the management is clearly saying that an NDA will be possible by the end of 2008. This has established a timeframe as to when the drug can realistically reach the market place given the excellent track record of the drug in the trials so far.
2) The 2 year timeframe for the approval of chronic usage together with requirement for safety data from 1500 patients, will be expensive, which the management will realize, RPRX cannot pursue alone without meaningful dilution of shares. This compels the company to offer Japan and or Europe to a partner, which the company was reluctant to do before, so that parallel studies can be initiated to generate the data.
The above scenario will also force the management to reduce its expectation regarding the sale price for the Proellex program, which could lead to a sale happening quickly. It also opens up the possibility of Repros accepting a lower offer for the whole company than expected rather than wait for two to three years while the studies are ongoing, while at the same time diluting the share count.
Rather than accept an offer for 1 Billion dollars, 2 to 3 years down the road when 30 Million shares are outstanding, why not accept an offer for 400 to 500 Million when only 15 million shares are outstanding?
In my opinion, with the willingness of FDA for the acceptance of anemia as an indication, sufficient derisking has taken place for the Proellex program and now will be the right time for a sale of the whole company.
