Replies to post #102133 on Innovation Pharmaceuticals Inc (IPIX)

[doubleupZW]

It will be interesting to see, but I also bet that part of the agreement was in the amount of stock that he gets. The money he put up to finance the company will be nothing compared to what he gets when it is sold. Im pretty sure since the loan was from himself, Leo is not worried whether he is going to get paid back or not. It would be like you starting a company with a business partner or "L and K" One of you says what do you bring to the table. L says money, K says an amazing background in science and a lot of compounds/meds. Ok we each get said amount of shares and put the others on the open market. Sure he has money invested in the business but he knows that Dr. M has the science and that eventually he will get paid back.

[BonelessCat]

That's not a fair characterization of the deal if you don't take into consideration the financial and management position of CTIX when the loans were made. CEO George Evans had just run CTIX into a financial ditch ahead of completion of tox testing and filing INDs for Kevetrin and Prurisol. The company was broke and unable to raise money due to low share value, lack of VC interest and absolutely no financing available except the most dilutive toxic kind. Evans solution was to do a reverse split, boost share price and sell shares; it was exactly the solution that sent Polymedix into bankruptcy. Menon and Leo were able to kill that idea. Instead, Leo first loaned the company substantial money when no one else would, this was before he became CEO. The loans paid for the Prurisol and Kevetrin formulation studies, advancement to INDs, and Kevetrin's Phase 1 trial. (It was George Evans who arranged to contract the manufacturing with a company that went bankrupt just before Kevetrin Phase 1 started, which delayed the start of that trial by a year).

Without the loans, the company would have liquidated, and considering the high risk Leo took making the loans, at the time the terms were very fair. But, in hindsight after 4 years of progress into a clinical stage company, and only looking at the "generous terms" through a less than historical prism, the loans seem self-serving and sweet when in fact they were fraught with risk.