RE: RE: RE: regional deal announced 75 milI sure did.
It seems that everyone is interested in how PRX will finance the go-forward plan. In the past year they have achieved the clinical endpoints and secured an apparent back-end-loaded licensing deal for Japan. With the positive news on these fronts the SP continues its downward trajectory.
Factors outside their control come into play, such as the failure of competitors at Phase 3 and low risk appetite in the market...unfortunate, but still factors we have to live with.
I believe that analysts covering PRX project a 12-month target in the range of $1.50 to $2.25. There is only one way to get there and that is through a N. American and/or a European co-development deal. I personally favor a deal, recognizing that it will be more back-end-loaded that I would have liked to have seen a year ago - but that is life.
The alternative option is to finance Phase 3 through an equity issue. I don't really like that kind of dilution - there has already been enough. In my experience, to get Phase 3 they will need to commit about $10 million for each market zone. It would be prudent in that scenario to go for only one zone and leave the other for a sunnier day. If a positive Phase 3 in either USA or the EU does not generate a licensing deal, this stock is worth next to zero.
A $10 million financing may be OK if they have access to the $5 million from the Kissei deal based on the non-defined "short-term milestone” and cut G&A to the bone. A further $5 million of equity would probably cost about a 15% dilution. If PRX chooses this direction, I hope that they consider a rights offering so that long-term investors can share the opportunity.
In any event, we have a little bit of quiet time as an end-of-Phase 2 meeting needs to be held with the USA and EU regulatory bodies. That's when the requirement for Phase 3 will be known and may also serve as a catalyst for a licensing deal.
One factor that I don’t quite know how to assess is options. None of the options issued to staff and B of D are in the money. An equity financing may mean a further wait of up to 18 to 24 months before there is significant enough stock price appreciation to make these options valuable. While this is a self-serving issue, it may come into play and lean towards a licensing deal.
Do you have any thoughts of PRX's future direction Zenith?