I personally believe the last throw of the dice for Cortex is coming up short.
Let me be more specific: Cortex will be/is a great investment for those investing at a dime or eight cents, or to the entity who will take it private and flip in a few years, or to the new retail investors, scooping shares, dollar cost averaging down from 17 to 5 cents a share as the end game unfolds, holding on through the reverse split(if it stays public which I doubt). In short, Cortex is a great deal for the next batch of folks since their is such a discount on market share price to market cap. For the current bag holders, nothing for a years.
Dr. Tracy makes an excellent point on how the end game might proceed. I forget Varney's future in some measure depends on how he handles the wrap up of Cortex. For him, success would be defined(or could be defined)as raising a few million, proceeding with a reverse split, regaining compliance in a few years with AMEX and have Cortex move up from a dollar a share(after the 20-1 reverse split) to maybe 3-4 dollars a share. Congratulations all around, except to the current investors who invested on average more than 20 cents a share so that 4 dollar figure 'down the road' turns out to 20 cents a share, a small premium to today's price. And my assumption here depends on management executing perfectly. Nuff said
=)
Varney's position here depends on a perceived turn around to future shareholders and owners, not todays. Is he desperate? Yes, because he knows the share price must stabilize as high as possible to allow the most proceeds to come in from the upcoming financing. So, diluting the company at 5 cents a share will not lead to a turn around, or raising any meaningful amount of cash.
Here Varney faces a dilemma. To sell the company at possibly 30 cents a share or 34 cents(for the BAM boys) or to reward present day shareholders, ending the misery for us, but realizing this would be realized by the industry as 'failure' while moving forward with the 5 cent 20 for 1 reverse split to a dollar, moving forward would be construed as 'success' by the industry. At 30 cents to 50 cents, I doubt it would be worthwhile for management with their option package in place, but a reverse split allows options to be granted to Varney and team over the next 3-4 years.
In short while 30 cents a share in a quick sale provides no perception of success or cash/options to management, while a PIPE, reverse split from 5 cents to one dollars(20 for 1) reverse split with possible turn around and movement up from a dollar to 3-4 dollars(or 15-20 cents per share for current shareholders) allows both a strong perception of success plus actual wealth in terms of future options if Cortex can turn around, not to mention a few more years salary in the bank.
This is the bleak reality we all know, and I suspect Varney realizes the jig is up. He really has to partner now(defined as before the special meeting) to stem the stock price slide, or risks raising near zero in terms of cash. Problem is the partner to be, the runaway partner, has no incentive to rush to the alter; why on god's green earth should they? Cortex lost what 15 % of their market cap in a few days last week... 20 cents down to 17 cents, they're out of cash, on the verge of delisting. Contrast this situation to the pharma who wants what Cortex has. If you were about to buy a car from a auto dealership on the verge of going out of business and they really needed your business, would you hold off, trying to structure a better deal? Would the threat of the auto dealership taking out a loan, using their entire stock as collateral to raise a few months of cash scare you? or would it motivate you just to hold off for a few more days, weeks, months.
So, Pharmacy X could pony up 3-5 million dollars now for a RD deal that would include CX717 and other low impacts(but not CX1739... the only clinic ready low impact ampakine), or wait a few more weeks for the Christmas fire sale where they might get quite a bit more(CX1739)for 5-6 million and possibly more 'stuff' they don't know what to do with: high impacts.
I'm not sure anything can be done to maximize current shareholder value, but I think a well designed sale is our best chance, for it takes low-ball estimates from a quick partnership out of the picture. I do think current shareholders would walk off with quick double from 17 cents in a quick sale.
AI
