Vin, there is no way to stop GTC from being able to increase the authorized shares. All they have to do is institute the RS and the number of shares is automatically increased. By a large amount.
If fact that is what I am expecting them to do sooner or later.
Letting them increase the number of shares outstanding now actually means they won’t need to do the RS to increase the number of shares authorized. Not right away at least. And most likely the stock will trade up from 13 cents without the RS after they get the cash and FDA approval.
IMO the reason they don’t reduce spending is because they realize that it won’t matter in the longer run, it will only prolong the time before they need money, the results will be the same. Getting FDA approval shouldn’t make it easier to raise money, but it may well cause a move up in the stock.
I see it one of two ways, either they will dilute old shareholders to 5% of the company, do the RS and get a whole new set of shareholders to invest, or they will get bought out by LFB when they run out of money in late 2009.
This is bascisally what VEXP has done for the last 10 years(dilution and RS). VEXP has had Splits:25-Apr-02 [1:5], 16- Feb-05 [1:50], 07-Dec-07 [1:15]. I think VEXP is the king of RS and dilution, even worse the Ampex was, must worse than any thing GTCB has done. (Dilution)
It all depends on whether LFB wants to fund GTC internally, or LFB wants to use GTC to develop the drug targets, but LFB would rather the public fund the effort. And if so, LFB might want to spin off their shares to the public assuming a better market for biotech. If so, then that would have to mean that GTC would need to become a growth stock sometime in 2010 - 2012, which is possible.
I am curious which way it will go, I lean towards LFB wanting GTC to be able to raise money from the public, but I don't have a strong opinion. IMO is really depends on how much cash LFB has available to fund all of GTC.
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