RE:RE:Communication with share holdersYes, I would say you still have a few levels to go, but you're getting there...like the giraffe. I wonder, does everyone here think that a head should roll if they ultimately conur with this analysis that the deal was sweet for 3 firms and a big stinker for everyone else? Sure looks to be a lot of value destruction so far.
SPCEO1 wrote: I spoke with the CFO shortly after the deal was announced. I probably was unable to hear much of anything he might have been saying to me as I was aghast at what I had just read. He also was not saying much as he knew I would be very upset. I applaud him for even answering the phone. The conversation was professional but tense, as you can imagine I have not attempted to speak to them since and they have not attempted to speak to me either. I still need to work through a few more stages of grief before that! It is incredibly frustrating to see a group of otherwise sensible people who had built a good track record of making wise decisions over the past two years and just culminated that good run of wise decision-making with a huge win in getting the FDA to endorse their phase III trial, something many doubted and with good reason for doubting it, and then have them totally blow all of that up with such an odious offering. Totally imncomprehensible unless there is something none of us are presently aware of that the board had to take into consideration.
My current theory is the comment that they were now at $65 million in cash (versus the pro forma amount of $70 million noted in the presentation) means they would have been at $22 million had they not done the offering. I am not sure how they ended up burning through $5 million in cash recently but that likely got the attention of a board that was already ansty about cashing up. When we get to the fourth quarter financial results, will the company indicate that the cash burn had stepped up in Q4 and was going to have to go higher in Q1 and beyond to support R&D - seems likely to me? So, while I was thinking they had sufficient cash to get them to some cancer data before having to raise new money, the board likely was starting to freak out about the cash projections.
So, maybe a financing deal was justifiable at this time. But this deal???? It just defies belief that better terms could not be found. Maybe they should have raised half as much as they did with the plan to raise the rest a little later. Did we really need to do 2 years of financing if there is a decent chance we could raise additional money that may be needed at a later date at a much higher price? And why did they not work hard to get US brokers involved and pick up some new research coverage - if you are going to give away the farm shouldn't you at least try to get something of value back in return???? You would have a hard time convicing me that the same deal could not be obtained via US brokers since they were giviing away so much. Does anyone know if there is some good reason for using the Canadian bought deal approach in these circumstances versus getting entangled in US regulations?
Clearly, the aftermath of the deadly deal they chose to do has been an unmitigated disaster, at least in the short term. The stock is incredibly cheap now with no value at all for NASH or cancer and yet NASH is the real deal and cancer looks pretty promising. That is a huge failure for the board and management and they will be fighting to throw off that mantle of failure for quite some time. The long term outcome for shareholders will almost certainly still be very good, just considerably less good than should be the case. And there likely were many other more sensible options that could have been implemented to avoid the current short term debacle for the share price.
In the end, it is hard to escape the feeling that three institutions laid a bunch of money on the table in front of the board and said you can have it if you want it, but only on these terms which are fantastic for us but horrible for your legacy shareholders. Boards need to have enough character to be able to suppress their instinct to grab that money and instead walk away from such "opportunities". They need to insist on doing business in a manner that is beneficial for the shareholders they represent. The dwindling cash was likely a legitimate concern but not big enough to justify the apparent panic it seems to have inspired. They should have had more financing options (it is management's fault if they did not have better options) and it is hard to believe they chose the one they chose.
quote=jeffm34]SPCEO1 has the company ever reached out to you prior to or after the financing ? Have you requested some answers from them ?
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