Curious to know why you think anyone exercising warrants would then quickly sell the shares they received into the market?
If their warrants were priced at, say $0.30, and the holder exercises 100k warrants (as you suggest) say, now, and then turns around and sells the shares they received, they’ll collect around $0.63 a share, or $63,000. But because the seller did not hang on to the shares for a year following upon receiving their shares, they pay the short term capital gains tax (like income) of 40 to 50%… and so will keep only around $32,000 to $38,000 of their $63,000 gain.
Most if not all who are exercising warrants these days are longs, meaning, most know they are waiting on trial data where the first two endpoints are likely to be stat sig. The main risk, as I see it, concerns whether the regulators will accept the external control arms used to prove a successful trial outcome. Since the Germans and the UK who control their clinical trial sites appear to be at peace with this change in endpoints, and the US regulators (who don’t control the clinical trial site - the sponsors do) have given written guidance and are publishing articles in credible medical journals indicating they are prepared to accept ECAs under certain conditions, I ask, then, why you think a long exercising their warrants would want to sell straight away, collecting only on half their small gains (after taxes), rather than it be to start the one year clock now for a long term gain? A year from now, their stock is very likely to be worth significantly more, after data is out, and within a year, DCVax-L is likely either approved by one or more regulators, and already bringing in revenue via Sawston. So why on earth do you think these longs would sell rather than exercise to start the one year long term capital gains clock?
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