Biotech Values

[DewDiligence]

Norman’s Klein’s Paris meeting with GTCB top management:

[Reposted from Yahoo board #19317-18, with minor edits by me to enhance clarity. Norman’s views echo my own with respect to Dr. Cox and Mr. Newberry; I have no direct experience with Mr. Green.]

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As a shareholder of quite a substantial amount of shares, I have been focused on four things in the meeting that I had with Cox/Green/Newberry.

1) Getting to know the management / reliability, managements vision.
2) Odds on approval of ATryn.
3) Financing of the company.
4) Promotion of the company (increasing volume by attracting institutions, investors, etc).

The first point is rather subjective, of course, but at least after a lengthy talk you at least have some kind of feeling. I found Dr. Cox a trustworthy person, honest, direct and nowhere near as nervous as he sometimes sounds in webcasts. He was very interested in my view and criticisms on the company even though, after all, I am just a small private investor and on certain issues we had different viewpoints. One previous issue I had remains: as the company now is transforming from a science company into a commercial organization, I cannot judge him very well as a dealmaker yet. Time will have to tell how good he is at that, though he surely does not strike me to not have confidence to make important deals and run the company well.

Mr. Green struck me from the beginning as a top-notch financial expert. I do not know a lot of his background but, by seeing him, he a person you would have trust and confidence in that he would look after your money very wisely and assure proper financing under the best conditions for both short and long term.

I already had some talks with Mr. Newberry in the past and he confirmed the image that I had of him: a very professional committed corporate communications, always friendly and willing to explain things over and over again, a listening ear also for criticisms with a great sense of humor.

Overall, a group of professionals that should be able to assure finance, get a product approved, and market it well: the ingredients for GTC’s success.

The odds on approval for ATryn are of course very important. Though there are several programs running, ATryn is the flagship and I (as an investor) still validate GTC as a one-product company. From the webcast it was already clear that the belief in approval of ATryn is very big; Cox’s words and belief and trust were clear as well in our talk, not different from the webcast. Clear to me was that GTC sees approval not as an IF but as a WHEN issue.

In between the lines I felt however some frustration that apparently the financial market and investors are still a bit GTC-phobic (for some reason at this stage GTC does not get peered with Pharming but with low-market-cap American companies, which does frustrate GTC). At the end this is not such a problem in my point of view (as LT investor), since a company will eventually be valuated on its revenue and profit and we are
nearing the commercialization of ATryn.

On financing of the company, I asked Mr. Green just two simple questions as I just wanted to know how easily they could get additional financing at any time if needed: what is the status of the off the shelf offering, and how easy could they finance themselves when needed and at what stage.

To my surprise, the shelf offering was closed -- the remaining shares I thought that still could have been put on the market cannot be put on the market anymore as the shelf offering was just valid for one placement.

About the if and when from getting additional financing at any time if needed, of course I did not expect GTC to unfold their strategy on this; though there is money for quite a while, still this is an issue that they consider very important and treat it like that with equal attention. GTC is confident that they IF and WHEN needed have access to financing without too much problem.

Promotion of the company (increasing volume by attracting institutions and investors) to me is an important issue as I find that so far GTC could improve quite a lot here. From experiences by having contact with a lot of transgenic investors, I know that the matter is very difficult to understand and the learning curve is long. [I strongly concur –Dew] This results in my eyes in the fact that a much smaller number of potential investors actually invest in the company, which results in low trading volumes, little interest from analysts and media, and therefore no new investors, no spotlight on the company and slowly but surely a lower market capitalization. They were very interested in my criticism and how I looked at the company from a private-shareholder’s view and what could be improved in my eyes. On the other hand, they also told me their restrictions and why they did the things the way they do them (which often made sense as well). I do however have a strong feeling that they appreciated my comments and are willing to expose themselves more in different kind of ways, as during the meeting a number of different new approaches were already discussed.

Well to summarize a long story: reliable people, trusting a lot in the abilities and especially in the approval of ATryn. They did not see financing as an hurdle, and they seem willing to increase promotion of the company which could for us as shareholders be a very important factor in terms of financial reward.

Kind Regards
Norman
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