GTC Biotherapeutics (fka GTCB)

[DewDiligence]

Late last week I started liquidating my position and, as of today, I’m done; for the first time in nearly four years, I own no shares of GTCB.

I decided to sell when it became apparent that the LFB financing deal was likely to be approved in the upcoming shareholder vote. My assessment is that, no matter how the dust settles from this transaction, the outcome is unlikely to be good for GTC’s shareholders (except possibly for LFB).

To fund operations during 2009, GTC will presumably need additional financing over and above the LFB loan. Moreover, GTC’s track record is that each financing round takes place at a lower valuation than the previous one (#msg-33740362). Absent a change in executive management, I see no reason why this pattern won’t continue.

GTC turned out to be my biggest investing mistake ever from both an economic and a conceptual standpoint. The economic mistake is obvious; the conceptual mistake is that I underweighted or overlooked readily apparent signals that the ship was sinking.

For now, I’ve placed the proceeds of the GTCB sale into my two largest biotech holdings: MNTA and IDIX.

Good luck to all.
Dew

p.s. Given the known details of Dr. Cox’s window dressing purchases last Friday, it’s a near certainty that I was on the other side of at least some of his trades. My opinion of Dr. Cox’s stewardship perhaps makes this a fitting dénouement.