GTC Biotherapeutics (fka GTCB)

[DragonBits]

Jessellivermore, regards the low price of GTC, it appears to me GTC is dealing from a weak position in any renegotiations with their partners.

You feel GTC is like a gold miner that has a claim on a piece of land that has been assayed and has a large vein of gold worth more than 500 million. But the GTC mine is the miner’s only source of income, and it has yet to produce much gold. The miner has taken on larger cash rich partners that have other revenue streams, and they have advanced the miner money for a 30% stake. (Strictly as an example, none of the numbers I use are representative of GTC’s actual situation) But the miner is running out of money and needs more cash to continue.

Granted the partners may lose some time and cash if the miner has to declare bankruptcy, but a GTC bankruptcy won’t seriously hurt Leo Pharma, LFB or Ovation viability as a company, and they could use their contracts to buy the GTC mine in a bankruptcy if it came to that. That way they could get the entire mine on the cheap, and if someone else outbid the partners for the mine, well they still have their claims on future revenues.

But as you imply, these partners don’t want a bankruptcy, which is GTCs’ only leverage in any renegotiations with their partners. So for the GTC owners, these issues are about survival and getting cut of the future big gains, for the partners it is a costly inconvenience at worst and at best they own the entire mine, or will have a larger profit.

So I believe GTC partners have much greater leverage in any renegotiations with GTC, and they will use that leverage to extract a greater shares of GTC’s future profits. The fact that GTC owns a very valuable resource will only make the vultures (partners) that much greedier. The only thing worse than dealing with the GTC partners would be getting a PIPE from black bart the market pirate.

Of course, it could always be that the gold vein isn’t worth as much as the miner has advertised to the public. Or the mining costs are much higher. Or maybe because of the high price of gold there are a lot of new mines coming on the market.

Ignoring these possible reasons for the low price of GTC, and while I can agree with you that it is likely GTC will find the money to survive, I believe they are dealing from a weak position that will limit their future profitability. Perhaps this is what the market sees as possibility.