GTC Biotherapeutics (fka GTCB)

[DewDiligence]

Musings on the US ATryn Partnership

Let’s recap what we know and what we think we know:

1. On the 3Q07 CC on 1-Nov-2007, GTC stated its desire to consummate a partnership deal by year-end; GTC took the unusual step of adding the anticipated up-front cash from the partnership deal to its 2007 year-end financial guidance (#msg-24216158: scan ¼ of the way down). This implies that GTC thought the deal had a 95% chance to be consummated by 12/31/07, IMO.

2. On 7-Jan-2008, GTC issued a PR that said GTC was “planning to conclude an agreement” by 3/31/08 (#msg-25781631). This language was even more confident than the language from the Nov07 CC. I infer that GTC now thought the deal had a 99% chance to be consummated by 3/31/08.

3. On 27-Mar-2008 (the penultimate business day of the month), LFB converted all but a token number of its GTC Series D preferred shares into GTC common shares (#msg-27988973). As noted in the contemporaneous discussion on this board, the only plausible reason for LFB to convert was to free up the Series D preferred shares for re-issuance to a new owner, presumably the US ATryn partner. That LFB went ahead and converted its preferred shares suggests that LFB, a 20% shareholder in GTC, approved of the partnership deal and agreed to cooperate with the legal maneuvering to make it happen. It also implies that the partnership deal was now 99.9% done, IMO.

4. March and April passed with nary a word of an ATryn partnership.

5. Today (5/8/08), GTC reported that the original partner was “diverted” from consummating the deal and that GTC is now talking to “additional new partners.”

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I don’t care much for word games. It seems pretty clear to me that the original partner walked and GTC no longer assumes that a deal will be inked with that company. The falling out may have had nothing to do with the proposed deal terms or it may have everything to do with the proposed deal terms—there’s no way we are going to find out.

The salient point is this: an almost-final deal fell through. This was a serious setback but not a fatal setback because other companies are interested in ATryn and GTC has reason to believe that a new deal will get done by the end of June.

That’s good enough for me. I can do without the sugarcoating that the original partner has merely been diverted.

JMHO, FWIW