Idera Pharmaceuticals Inc (IDRA)

[ajsmith]

Clearly, the Bakers wanted to grab more stock in the offerings, and thus own more of the company, than the IDRA board was comfortable with. Owning 40 million warrants with the restrictions attached (stay below 5%, except with 60 days written notice, and even then stay below 20% as a condition of the warrants) represents a neat, and also very bullish way to get huge leverage on the shares without becoming seen as a hindrance to corporate governance.

Given the Bakers' history, they'll likely wait until the stock is way up there (I think they've finally been selling some PCYC at well over $100,) sell some of their actual shares, and then re-up to 4.99% by exercising a portion of their warrants. Wash, rinse, repeat. My strong suspicion is that they'll dilute and divest slowly and carefully.

To lock themselves into such an enormous (large, even for them) illiquid position is a remarkable show of confidence. But if you know anything about the history of this lab, you know that it won't be surprising if they end up changing the game in the autoimmune field. I have a strong feeling that the Bakers know what they're doing here.