Replies to post #54944 on Biotech Values

[croumagnon]

"Why do you think Pipex wanted a public listing?"

You make a good point but going public is not always about raising money for the company and sometimes it is because the various original investors insist on having the option to sell when, and if, they chose to on an upsurge in the stock price.

"If Pipex had cutting-edge science with outstanding prospects and no need for a capital infusion, as Kanzer asserts, why didn’t the company’s owners prefer to stay private and reap 100% of the benefits for themselves?"

Similar answer as to the above. I have a friend who works with a large capital venture firm and that firm essentially funds the companies through and through until they become nearly profitable before going public. Sometimes they sell the company outright after profitability and sometimes they go public to allow the original investors to sell their shares at their own time of chosing. It is never about all or nothing because different original investors may have differing opinions and schedules as to when they want to reap their rewards...

Thank you for your explanation regarding the reverse merger into a corporate shell...

PP may not have cutting edge sciences but I still think it is a worthwhile investment and I plan on accumulating the stock slowly but surely, although I have taken your negative comments under advicement and I will be careful going forward. I just wish they had options trading so that I can minimize my risk and enhance my potential returns...

[mouton29]

": Why do you think Pipex wanted a public listing? Kanzer claims that the company will be “highly profitable” in 2008, so the rationale for going public via a reverse merger was presumably not to facilitate the raising of capital."

Not so. The company raised $13.5 million in private placements just before and after the reverse merger. Do you think it might be possible that the investors in the private placement insisted on receiving stock in a public company? The whole thing is just a low rent way to go public, in effect they paid 2% or so to the shareholders of the public shell.

"If Pipex had cutting-edge science with outstanding prospects and no need for a capital infusion, as Kanzer asserts, why didn’t the company’s owners prefer to stay private and reap 100% of the benefits for themselves?"

I don't think he made any such statement before the private placements, did he? Kanzer basically funded and started the company. He is the real insider and so far as I can tell, he has not sold any of his stock.