Some answers I was asked to post on regarding recent SEC filings:
Several posters reached out privately for my opinion on recent SEC filings by Flouropharma. I have digested the recent filings, previous years filings and also research industry related documents in the area of interest to form an accurate personal opinion for you. I will provide a general opinion that is to the point and not jammed with data that usually makes peoples eyes spin and glaze over.
The main question was about shares, effects of dilution and company financials:
Clinical research and development Biotech companies in the early stages all burn cash and have little to no revenue. Everyone knows this. Companies need to raise capital to fund business. Capital is raised through equity offerings or debt. If capital via debt cannot be raised with good borrowing terms than equity offerings is the standard alternative. Offering equity does have a dilutive effect for existing stock holders. Everyone knows this. It is an inescapable fact for the biotech industry as they work through the long (and exciting) development process. However, the type of equity offering has different effects on stock price historically.
Large public offerings vs. Private Placements.
Instead of large public offerings of stock, FPMI has historically raised capital with Private Placements. Private placement info is everywhere online of you want to read up more on your own. PP are institutions, knowledgeable industry savy investors and insiders for the most part. FPMI has raised capital several times via PP and the latest was in February '14. Using PP, though dilutive, is often looked at as a positive evil, because the investors are insiders, or extremely knowledgeable about the potential and future of the company. ALSO, when the same investors take part in numerous consecutive PP offerings, it again shows confidence in the long term potential of the company and their pipeline. Also, PP offerings usually signal that these investors feel the stock is undervalued. THIS IS WHAT WE HAVE HERE WITH FPMI AND WHY I AM EXTREMELY CONFIDENT ABOUT THIS STOCKS POTENTIAL! Yes, there has been dilution and yes there will be future dilution. It is a fact of early biotech life. Everyone knows this. We currently have sufficient cash (no debt) according to the company until August of 2014. If partnerships or other funding isn't acquired by then, then they will have to logically repeat this process. I am 100%fine with this scenario. As long as the data is positive I am holding long with this company. I will buy on any significant dips and smile on any significant spikes from positive news and trial catalysts. That has proven to be a successful investment strategy for me historically when the future potential of the company is as big as Flouropharmas is. So again the highlights of this post are as follows:
Raising capital is necessary
Using Private Placements is a good option compared to alternatives
Having insiders and repeat investors is very positive
This stock is undervalued.
The future of this company is very strong
This post was a very abridged version of the information that I digested/gained in my research recently. If you have a specific question I will do my best to get you a specific answer. That would be the easiest, especially if it is a specific financial/share related question. This was not meant to be a 50 page analyst report. There is many are many printable undisclosed. Hence, my willingness to address specific questions. again, I am long with FPMI and will continue to add to my position unless the company news changes. Presently I am strong on FPMI for shareholder value.
Heading of to work now while the temps in Rhode Island are decent. Have a great weekend everyone and chat again soon. RR
