Replies to post #51003 on Biotech Values

[ghmm]

PP -

I'd be cautious here as well. I didn't feel comfortable with managements characterization of their Pulmonary Fibrosis program to consider investing especially when its only been tested on about a dozen patients. From what I gather it certainly seems like it could be a good drug for Wilsons disease though I am not sure it will be a profitable one (judging by pricing of other drugs in indication, number of patients and improvement it may have upon them). Now Alzheimer's that sounds like a good potential market opportunity for Coprexa... what next?

Aside from the science, the options and warrants (at much lower prices) raised another flag.

This from the 10-k (Need to adjust for the reverse split I believe was 3-1 still quite a number of low priced warrants):
http://www.sec.gov/Archives/edgar/data/894158/000089016307000211/s11-7240_10ksb.htm
(G) Stock Warrants

In October and November 2006, the Company issued warrants to purchase 10,351,979 shares of common stock as part of the private placement offering. The warrants have an exercise price of $0.74 and each warrant has a life of 5 years.

In addition, as part of the private placements, the Company issued warrants to purchase 2,874,831 shares of common stock to the placement agent, which is a company that is controlled by the Company’s Chairman and CEO. The warrants have an exercise price of $0.74. The fair value of the warrants totals $4,555,457 and was determined by using the Black-Scholes model with the following assumptions: expected dividend yield of 0%; expected volatility of 79.4%; risk-free interest rate of 4.54% and an expected life of ten years. Since these warrants were granted as compensation in connection with an equity raise, the Company has treated these warrants as a direct offering cost. The result of the transaction has a $0 net effect to equity. The warrants are fully vested and non-forfeitable.

On October 31, 2006, the loans payable to the Company’s founder, President and CEO were converted into 4,995,633 shares of common stock and 2,497,817 warrants to purchase common stock. The warrants have an exercise price of $0.74 and a life of 5 years. (See Note 4)

12,849,796 of the warrants are callable by Pipex in the event that Pipex’s common stock trades at $1.85 per share for 20 of 30 consecutive days. Accordingly, net proceeds of approximately $9,500,000 may be realized by Pipex in the event that all of the warrants are exercised.

A summary of warrant activity for the years ended December 31, 2006 and 2005 is as follows:

  	  	  	Number of 
 Shares 
                            	Balance as December 31, 2005 	     	  	— 	  
                            	Granted 	     	  	15,724,627 	  
                            	Exercised 	     	  	— 	  
                            	Forfeited 	     	  	— 	  
   	  	     	  		  
                            	Balance as December 31, 2006 	     	  	15,724,627