Avid Bioservices Inc (CDMO)

[Unemon]

Making sense ... of why PPHM would raise 125m USD

Actually I am having an hard time ... figuring out why PPHM has decided to raise such an amount of money (98m of Preferred Shares + 27m under the ATM)

We do know that PPHM started a PIII trial for sunrise last December. This Trial will enroll 600 patients.

The average Phase 3 per-patient cost of $74,800 is higher than the Phase 1 and Phase 2 trials examined in this study. Furthermore, three Phase 3 trials surpassed $100,000 in per-patient costs — more than almost every Phase 1 or Phase 2 trial that we studied

See the entire article: Phase-3-Oncology-Trial-Costs

Even if you take tha Upper range (100,000 USD per patient), the Cost for Sunrise Phase III would probably be not higher than 60m USD.

Recent developments put PPHM cash position at approximately (inclusind cash on hand as of October 2013) at 169m USD

Recent Cash Burn Rate ... was just below 4m USD per quarter.


Over the next 3 years PPHM could therefore have been expected to burn approximately 50m USD (rounded 3y*4q*4m/q)

If you add the 60m USD PPHM is probably going to spend for the Sunrise Phase III ... you will get to a cash need of 110m USD till the end of 2017.

So, why did PPHM need to raise 125m USD and bring its cash position to 169m USD?

I see 3 possible Explanations:

1. They might also start the other PIII clinical trial on their own

2. The Preferred Offering could be a way to let a partner in

3. The Preferred Offering could not be of 100m USD


Notes to point 3. The registration S3 was for 100m USD.This However does not mean they will raise the entire amount of money (100m USD). It could be that they issue Preferred for a nominal value of 50M USD. In the prospectus they did not indicate the amount to be issued).

Anyway ... PPHM's having a good day today.