SPCEO1 wrote: They need the share price to be higher to attract buying of the stock from institutions. A sub $5 share price and a market cap of $175 million means no institutions are even going to look at TH as a stock to potentially purchase. Now, the risk is the company adds new instutional holders, who are mesmerized by the cancer opportunity, via selling shares at a low price in a direct placement to those institutions thinking this will somehow be a benefit to all shareholders. the new institutions would be long term holders like many of us and trading volume would not likely pick up much. The company would have more cash for R&D and that may pay off in the long term with faster progress or new indications. But in the short term and long term, we would just have our position in any benefits diluted. Now, there are many possible ways of going about raising new money and our CEO said in his last presentation he has many options. So, depending on what kind of deal might be structured, it may be a win for everyone. But make no mistake, there are options that could worsen our position too,
To me, the most sensible thing is to raise money after the FDA agrees with TH phase III NASH protocol. If they get the FDA's agreement, analysts will pump the stock price up and a deal could be done at a non-horrible price. And TH would actually need the money to perform the phase III testing. If the FDA gives feedback that means there is no reason to proceed with the NASH phase III, then TH does not need the money anyway and no deal needs to be done.
Now, management may be looking at this differenctly than us. Knowing their approach to the FDA on NASH is a bit odd and not wanting to bet the company on a successful cancer phase I, they may want to raise money ahead of the FDA's decision on NASH so they derisk their situation and could pursue acquisitions of other products should neither of their current projects work out. If so, they might be willing to throw current shareholders under the bus by doing a deal at a low price to achieve that goal, using the excuse that they need more diversity in their shareholder base to justify the deal at a bad price. That would be a pretty lame thing to do but it may well be a consideration. Also, by treating legacy shareholders poorly, TH's ability to attract new shareholders would be undermined. Capital flows to where it is treated well. So, I sure hope they opt for treating our long term capital investment in TH well and don't even think about such options as it would only undermine the reputation of TH as a decent investment more than the poor marketing performance of Egrifta and Trogarzo already have. It would likely be the final nail in TH's coffin if they went that route.
The best way to derisk would be via a partnership deal on cancer. That market is hot and raising money in that manner might not be very hard. While earlier than any of us should desire them to do a parntership deal since so much more value could be obtained follwoing a successful phase I test, if derisking the possibility of a failure in both NASH and cancer is viewed as necessary, then a partnership is the way to go as it would legitimize the cancer opportunity in the market's eyes leading to a higher share price. Shareholders would be giving up some considerable portion of the upside from cancer but it looks like there could be quite a bit of upside there given the number of cancerous tumors overexpressing sortilin.
So, I am all in favor of diversifying the shareholder base and getting more instutional shareholders in the stock, but only if done in a manner that enhances TH's reputation for treating investors well rather than detracting from it. I believe our board of directors has at least some members who see things in that manner and hope they are able to prevail in any discussions that may be going on regarding the subject of raising funds. The timing of raising money is crucial, the method used to raise money is crucial and the terms are also crusial. Throwing legacy shareholders under the bus is the easy way to raise money but the long term consequences for the reputation of management and the company gets trashed in the process and limits the ability for the stock to be valued fairly over the longer term.
ggg088 wrote: Both R & D and marketing need financing support, they must raise enough funding to increase revenue and meet R&D investment. So key point is still to get more institutional investors invloved in.