RE:RE:RE:Yet more on the meeting with managementThere could also be a creative way to match up a future partner in China with the convert redemption. Have the partner provide the funds for a stake of x% or a convert/equity deal - something along those lines. Or you may even be able to convince them to redeem the convert, take a similar convert with lower rate, $10 strike and 3 years.
SPCEO1 wrote: They said they have enough money to complete the phase 1b and then some. They need to address the convertible because institutional investors see it looming in the distance with no apparent way for TH to pay it off, so they move on without buying the stock. So, if I understood things correctly, they will do what most likely will be a debt financing to show they can pay the convert off when it comes due and if it does not convert. Would I be surprised if they raised more than $57.5 million - no I would not. In the end, I recieved no clarity on exactly what kind of financing they will do so they may have something more interesting than just a straight debt deal up their sleeve. I did not get the impression that we would have to wait a lot longer to get this sorted out.
With NASH sidelined for now and with potential cash coming from a Chinese partnership deal, I am not sure if we will see an equity offering anytime soon. But TH is a biotech and they like to raise equity financing, so we should expect one, especially if the stock price rises on the back of the news we get in the months ahead.
Maybe one possibilitiy is they get a line of credit they can draw on if necesary to redeem the convert. Or maybe something like that is part of the solution. A line of credit would be the best solution as they might not have to draw on it if TH-1902 is clearly a big winner by June of 2023 and the stock flies higher leading to the convert converting instead of being redeemed. Meanwhile, no interest expense would have been paid for undrawn funds.
I really do not know what they might do - I just know they seem to be close to doing something and they have mentioned a debt deal as a possibility in the past. They also indicated whatever it is they are planning on doing would get them some analyst coverage. So, that sounds like a debt or equity offering or some combination of the above. Given how low the stock price is right now and the very sizable additional dilution to our ownership an equity offering of that size would entail, all signs point to a debt deal of some sort.
qwerty22 wrote: Are you suggesting they will come to some new arrangement for the convertible early before then going on to the financing for the trial?
SPCEO1 wrote: There was some discussion around the financing issue. They know they need to assure the market they can handle the possible redemption of the convert in order to attract investors to the stock. So, some sort of financing is going to happen sometime soon. It sure sounded like the debt option is still the main one on the table but I really do not have a firm idea of what they might be up to here. Maybe there is something quite creative on the financing front but it more likely just going to be a sizable debt deal so the market can see they have the funds to redeem the convert if needed in June 2023. They are not burning through much cash and still have enough to run the cancer trial plus some extra. But, biotechs need to have a healthy cash balance to be treated right by investors. I asked if they were to do a debt deal would they also get analyst coverage along with that and I got a very confident affirmative reply. So, maybe the calvary will finally arrive on the analyst front.
On the China partnership deal front, it seems both TH and the Chinese companies are now more interested in waiting for the preliminary efficacy data before moving forward since it is so close at hand. TH is interested in waiting as they want to attract top tier Chinese biotechs to the deal and preliminary efficacy signals will help with that. It will be interesting to see what amount of cash upfront payment might be realized from this potential source. Paul said the interest in a partnership is "as good as it gets" but I suspect the salesman in him was coming out (like when Italy's pricing decision for Trogarzo was a good indicator for the rest of Europe or that there was partnership interest in NASH - CEO's have to say such things but they are half truths at best). Hopefully, anything they might be able to structure on this front will not ultimately come back to bite them.
On NASH, the revised protocol is almost done and they expect no surprises there, so it should be as they have already talked about. Of course, NASH is still temporarily mothballed due to t he water issue (the one plant that produces this water is in India and run by Pfizer) He indicated they are still committed to NASH but one has to wonder how strong the committment is at this point. He is still counting on good MDGL results late this year to stir up interest in NASH among potential financial partners again. I will believe that when I see it. He said TH had done an market study for Egrifta in NASH and got good results from the field about the potential interest in Egrifta for NASH.
Paul again stated that Egrifta sales are rebounding nicely post covid and post the sales force internalization. I will be amazed if they meet their guidance for fiscal 2022 but they are at least off to a good start. Not much was said about Trogarzo sales in the US.
That's about it - hope that helps.