jfm1330 wrote: Sorry SPCEO,
This a dialogue of the deafs or to put it another way that is line with the times we are in, we do not agree on facts, so it is very hard to have a healthy discussion.
I don't see anyhting unhealthy in our discussion. If disagreement on the facts mean it is unhelathy, then we are all in more trouble than I thought. I don't agree that board and management at Thera are a bunch of fools or incompetents on the financial side of the business.
Neither do I as I have pointed out repeatedly. But they did do a disastrous financing. So, that really cannot be ignored either. They have developed a good track record of making wise decisions over two years at least and did not get much credit from the markets for that. But the deal they did has really set the company back and the reputation of management too. They really cannot be any denying of that. They did not make a better deal because there was no better deals on the table anywhere.
Please see my last post that analyszed the LPCN deal and perhaps it will,leave you wondering if TH could not have found a better deal. If it doesn't leave you wondering that, I am not sure what else can be said to convince you. Also, Thera's SP is not close to other NASH players because clearly the market does not see the actual situation of the company as you, me and others here see it. If Thera would obviously look like such a bargain, investors would drive the SP much higher, but it is not the case. Why???
I really do not have a good explanation for this shortcoming. Management of TH is not awful, they just pulled off a trick (getting the FDA go ahead on the NASH phase III) for which they should be celebrated as geniuses and yet they get no respect at all from the investment community. It really makes little sense to me. Many here put the blame on the management, but if the bargain was so obvious the management would have nothing to do. Do you think we are the only ones able to make comparisons of market caps between Thera and other NASH players???
Have you seen the company make those comparisons in their invetor presentation? Have you seen the analysts make those comparisons in their reports on TH? Unforutnately, you ahve only seen those comparisons on this website because I put the spreadsheet together and Wino is kind enough to make it readable.Seriously. Come on! Many are aware of this situation but for some reasons are not convinced.
I would feel better about your arguament if you could provide a good reason why what is clearly obvious is being ignored. Analysts are giving no value at this point to NASH and oncology programs? Why? Don't tell me it's because of management.
Well, they have to be partly responsible as who else is supposed to make these facts widely known and draw attention to the severe undervaluation of TH shares? Is it so hard to acknowledge that at this point in the development of these two programs the market is not convinced they have very high chance of success?
What is troubling is the market is willing to attribiute some chance of success to just about anythign else in this space but TH's clinical programs. Clearly you can see that.Cry as much as you want about the financing, one thing is sure, a lot of financial risks are now out of the equation
I agree but the cost of getting here was ridiculous. Scandalous even, and given the size of the markets they are aiming at, even a 120 M shares outstanding, Thera should be a bargain in your view, in my view, and in the view of many here. So why with less risks and still very high potential return is it still a bit above 2$ US? Why. Before financing, after financing, the market has not changed its view. It still give zero value to the two clinical programs.
And this seems to be uniquely a TH problem. Which makes as much sense as the value given by the market to those programs - zero! Think about it. Thera bought Katana two years ago for around 15 M$ CAN. Why were they able to buy it at such a cheap price if it's the next blockbuster in cancer?
My recollection is they got it cheaper than that even and it is one of the reasons I maintained a high degree of skepticism about it and still I don't put any value on it in my models. Perhaps I should at least value it at what they papid for it. But yu have to admit it has become much more intriguiing since they bought it and I am willing to bet the new institutions who bought the deal are in TH for cancer more than NASH. Moreover, those institutions likely have analysts whoa re really skilled in ferreting out promising cancer plays. Two possibilities, potential buyers were not convinced by the science behind it, or they were wrong in their analysis, the science is in fact great. Here we think the science is great and that odds of success are good. Great! But two years ago, all Katana was able to get for that great science was 15 M$ from Thera, a very small pharma from the same city. Is it possible that most US investors won't believe in Canadian science until clearly proven wrong. I say MOST US investors, not all. I am just asking the question and it is not aimed at you because you clearly believed in Thera since a long while. As you note, t
hat is defintely not my complaint. When I read some here about the Canadian management of Thera, or the fact that Thera is a Canadian company, it is not hard to believe there is some kind of bias against Canadian stuff in general. The little neighbour that do not belong in the big leagues. This prejudice seems to be there, at least from my point of view. I know there are many Americans here that are shareholders, so clearly this not true for everybody, but to make a stock rise you need more than a few people.
I think the actual undervaluation of Thera is due to many reasons. But it is real.
It sure is and perhaps it was justified before the FDA endorsement of the phase III, but not now. It is not the result of poor promotion. Again, analysts are well aware of everything the company is doing. They know the whole story and the give zero value to both clinical programs. What we see as convincing is not convincing them. That's the reality.
I can't argue that this is the reality since it is. But I will put some blame on management. It is there job to get the analysts straightened out. And they actually can tell them, "we told you so!" Management should be being celebrated for what they have pulled off. It is hard to understand why the analysts refuse to celebrate them for this incredible achievement which the analysts questioned. Look at the RBC analyst - he would not even concede after the FDA mades it view clear. TH needs to get in his face just like ICPT did yesterday when they publically called him out on his bad analysis. Only new clear positive data in cancer and a clear protocol and timeline in NASH will change that.
I disagree. The company has enough in hand already to be able to argue the stock deserves at least some credit for NASH. I am not asking for MDGL's valuation but I do think something well above zero is easily justifiable. SPCEO1 wrote: Sorry JFM, I don't agree with 100% of what you said as someone else has said. But I don't disagree entirely either. See my comments in
red below.
jfm1330 wrote: Sorry guys. This board is now verging on the crazy. It is hard for me to write this here because I respect many contributors. To highly dislike this deal is one thing, and I don't like the deal myself, but all the conspiracy stuff to explain it is pure BS.
You can have the best science, promising clinical programs aiming at big markets, but if you don't have the money to do the work that needs to be done to get approval, the science is worth nothing. This is obviously true, but when that money is required and the terms on which it is acquired is the issue here.
I am a science guy here and me tell you that none of the two programs are slam dunks. They are very promising, but both lack data at this point to be highly confident in positive outcomes. For sure, your opinion can be very positive because YOU think that the holes in the story will be filled down the line, but it is only YOUR opinion. Clinical trials exist for a reason, to prove that drugs are safe and effective before being approved. So, I suppose what you are saying is that the stock has been valued appropriately all this time. Only other stocks get valued higher despite the fact that they are even farther behind TH in NASH trials???? You do realize that your argument here may be valind in a standalone manner with TH but when compared with other NASH stocks quickly falls apart. Moreover, with the safety issue resolved with Egrifta, you would think that would count for something with TH versus others, especially mwhen safety issues just took out the leading NASH candidate (ICPT) among others vying for the big NASH prize. Moreover, we can really have a high degree of confidence that Egrifta works well in NASH based on the completed trials on HIV livers that showed it was successful. Sure more work needs to be done but that is true for every NASH stock - so why is TH the only one that your harsh way of looking at it should apply to?
The idea that Thera is an unknown company with unknown extrordinary clinical programs is false. It would not be the first time that this board would take its dream for the reality. Remember all the Ibalizumab/Trogarzo saga. A deal too good to be true and all that, an unreactive market to such a great deal, then approval and a sharp rise in the SP, only to fall like a broken rocket when the sales were not there. The blame game was there too. The problem was not the drug, it was the management. I will try to not say as much as I might like to here. The Trogarzo deal was a great deal and even with the poor sales performance of the drug, the returns have still been very good for shareholders. That deal put very little shareholder capital at risk - that is what made it such a great deal. Even if it disppointed, as it eventually did, it was still a great deal worth doing because we were playing with house money, not our own. It was a freaking brilliant deal. Also, the stock did not run up massively initially in reaction to the announcement but did eventually run up a lot prior to approval too. I don't know of anyone who was not anticipating great sales, on or off this board, before the RBC analyst came out with his weak forecast in early September 2018. Management certainly deserved blame for sales being far below their forecasts and what their marketing study indicated.
And now this board is at it once again with its lack of realism. We all knew a financing was coming, and we were overoptimistic about the possible terms of that financing. Clearly these are true statements since the deal is completed and the terms were atrocious. But, again, other NASH companies were often raising more money on much more attractive terms despite not really being better positioned than TH. We had every reason to expect TH to at least get terms similiar to other companies once the FDA had backed their phase III plan. The SP was not going to triple without good early results in cancer and without knowing the protocol for the phase III in NASH. Again, other NASH stocks do not seem to have this issue so why should TH? We are 6 to 9 months away from that. With the company burn rate, no way the company would have waited that long and being that low in cash before doing a financing. Do you think they could have waited 4-6 weeks before doing a financing to let the news filter into the share price a bit more than what happened over three days? Also, I cannot find any reason why the company was not able to negotiate better terms, ones that were comparable to the many other NASH deals done in recent quarters. We are in a enormous bull market - it has proven easy for all sorts of suspect companies to raise serious money on good terms.
You were all happy when they announced that they would go for general NASH. Yes, a huge market!!! But you thought it would be cheap, that it would not lead to significant dilution? Come on! Learn to deal with your disappointment, or should I say your lack of realism. You are just making stuff up here. No one thought it would be cheap. We discussed the need for an offering on many occaisions and we raised concerns aboout such an offering being done at too low of a price. There was no lack of realism at all. In fact this board is to be congratulated for its realism - have you not read all the discussions about whether it was realistic to think we had a shot at a phase III in NASH. I know you read them because you contributed a lot to those discussions, which was greatly appreciated. This board has more realism than just about any I have ever seen and that is why it has been so valuable.
Again. I am fed up to read conspiracy stuff that management would be in cahoots with National Bank. I definitely agree with you on that. Tanguay came from National Bank and former chairman of the board, Paul Pommier, still on the board an the biggest shareholder by far on the board, is also a former National Bank guy. So if their plan was to rob Thera's shareholders, it would have been done a long time ago. The IPO of Thera was done with National Bank.
To think that Svoronos and Levesque would have allowed a bad deal to favor National Bank is just crazy. Also, to think they only talked to Canadian brokers to do this financing deal is also crazy. They pay to be on NASDAQ, they pay a US based IR person, and they would not try to find a financing deal in the US???!!! Stop it!!! I have no doubt they spoke with US banks at some point but it is incomprehensible they could not find a deal with t hem that was better than the one they got. Again, I am seeing really silly companies doing deals all over the palce in this bull market. How is it that TH could not get treated similiarily by US brokers. It just doesn't add up.
I said it before and I will say it again. This deal is the best they were able to find. I have to believe that it true since it is impossible to think they could have had a better deal and did not take it. The problem is, if this is the best they could do in a huge bull market environment, it really kind of speaks volumes about the capabilities of our management team, right? They did it as way to mitigate financial risks for the company. Bill Belichik said a few years ago about carrying three QBs on his active roster: "Nobdy needs insurance until you need insurance". This deal for Thera is insurance. The premium is high, but it is the best they were able to find and it insures that now they will be able to bring meaningful data to the markets. Again, yes huge dilution, but the company is now in an other league. General NASH and multiple cancers are huge markets. They bought too much isurance, too soon at way too high a price and in an insurance market that was offering great deals to many others. It was simply the worst possible outcome that I can think of.