Why would anybody sell now?
Well, you now have only 120 million shares outstanding with 6 billion authorized.
First, you have the old note holders who still have some to convert. I'm figuring that is 20-30 million shares.
Then you have the new note holders who have $10 million to convert and sell. That is another 100 million shares.
So any way you cut it, there is more than 100% dilution coming in the next few months. Even if you got great news, which spiked the price and volume, the volume demand will be met with those 130 million new shares. That will tend to keep the price down. Yesterdays volume, which looked really good, would have been about 3 million post split. Even if you had news that would spike the volume 5X yesterday's, it would take 10 trading days just to cover all the new shares being sold. The note holders sell, they do not hold. So as they convert, the new shares will come into the market and be part of the new float.
I still think that there will be a good entry point soon. If they can find a way to get the notes converted before the Agenda results are released, let it drop from the conversions, then get the price back up with that release, they could be in pretty good shape. If the results are very positive, you could see this run to a market cap of $300 million pretty quickly. So my entry plan is to track the conversion and try to get in as soon as I think it is 80-90% complete. Hopefully they have a few lesser news stories in their back pocket that can keep the volume up during the conversion.
But remember, they will need more money. I'm figuring the Agenda results in early fall (September-October), 4 months to completed the NDA (please don't rush it, make sure everything is RIGHT this time!), then the FDA takes 6 months for approval. So taking the conservative approach, we should see an approval/denial decision next summer. The money they have now will get them through the end of the year. So the question is, do you partner before the NDA or wait for the big bucks with approval? If they wait, they will need money early next year. If they follow the plan I outlined they could have a $1 stock with about 300 million outstanding by the end of the year. That is a much better position to be in then where they are today. In those conditions you should be able to get another finance deal for $25 million, that costs you no more than 50 million more convertible shares. All at a time when developmental biotechs have historically seen their biggest gains, between NDA and the decision. So there should be plenty of volume for the conversion and the price to go up as people buy in waiting for the approval decision.
My guess for me- I get in in August or September, hold as the price moves up after the NDA is filed, then sell most at the peak just before the announcement. My hope is that I get in at or below $0.25, start selling at $1, and be 90% out of the stock when the FDA decision is released. I figure I can make 400-600%.
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