Biotech Values

[DewDiligence]

Re: GTCB shelf registration

I talked to Tom Newberry in August on the day of GTC’s most recent PIPE and I expressed a negative view about GTC’s repeated use of PIPE’s to fund operations.

I asked Newberry why GTC didn’t instead opt for conventional underwritten financings; conventional financings eliminate the incentive for the “pump & dump” activity typically seen with PIPE’s: the artificial buying during the pre-PIPE period followed by aggressive shorting by the PIPE buyers when the buying frenzy has peaked.

Newberry replied that is was impractical for GTC to do a traditional financing because the dollar amount under the old shelf registration was almost exhausted. (Moreover, the two-year duration of the old shelf had almost expired.) Without a usable shelf registration, it was impractical for GTC to raise capital the conventional way because, sans shelf, such a financing would require a delay of several months for the SEC to review the financing documents.

I asked Newberry why GTC did not move to file a new shelf registration so it could conduct conventional financings in the future. He said this was an option under consideration.

Well, the new shelf has now been filed (although it is not yet effective). This means that, in future financings, GTC will at least have the option to go the conventional (non-PIPE) route.

Because GTC has more than sufficient cash to last until the EMEA’s ATryn opinion expected in February, barring some major new development I would not expect a financing until after the EMEA’s opinion is rendered.

Dew