RE:Convertible pricingI believe the NASH protocol's chance of success is much higher than the phase1 cancer, they know the drug is safe they know the dosing and it worked on although small number of patients but more problematic HIV liver.
Also if that is what company think they would hold on to NASH in the event cancer fails cause if not they end up with the legacy drugs which most likely will not meet the intial sale estimates.
They also are shifting away from the HIV space and moving to conditions in general population thus trying to diversify their business.I think the company see itself more as a R&D company now.
Another way to look at is they wanted to secure the funds and get it over with so they can start the programs as soon as possible without worrying about any early set back from cancer program and even if the SP had risen another 40, 50 percent in the next few weeks in their mind they thought they couldn't secure a much more favourable deal as the banks wouldn't give them much more credit as the stock is volatile and both trials can fail.
Although the raise doesn't make sense a very conservative company could make a questionable decision like that.
SPCEO1 wrote: I took a look to see if the convert bounced on the news of the offering. You would expect that the increased finances would give greater confidence to the people holding it as a bond, which is everyone holdinig right now, that the company will be better bale to pay it off when it comes due in a bit more than two years from now. But, basically, it has not moved at all from when the news of the offering came out.
Now, the money raised was spcifically targetted to pay for the R&D over the next couple of years, so perhaps that is why the convert was unimpressed. But if the R&D programs all failed to move forward (cancer pahse I throws off a safety issue and the FDA reverses course on the NASH phase III) then the company would likely have enough money to redeem the convert. Perhaps this scenario was in TH's mind when they did this deal? It represents the most extreme downside scenario and, to me, is not what they should have been making their financing decision based on but they have more knowledge than us on the chances of success in cancer and the issues the FDA might yet have on NASH. If the risks are uglier than we realize, perhaps that motivated their call on this financing?
I am trying to work hard at finding a reason why otherwise sensible people would have pursued this financing and, as you can see, it is not an easy task,