Low stock price to blame for partnering NASH?Unfortunately for us, the whole NASH space is in a deep hole right now due to trial failures of various sorts and colors. And all the losses investors relaized on those failures really started to be an issue just as TH moved into general NASH. So, their timing from the capital markets perspective was certainly less than ideal (their timing in the market for partnerships is also not ideal but their prospects their might be a bit better since science will play a bigger role than in the capital markets). Since the market would not give TH any value for its NASH asset, partnering is likely the easiest way to validate what that asset is worth. Given that cancer is almost certainly on the right track (re-read the way Marsolais said things and I think you will agree), partnering NASH also makes sense.
But had the company been able to get a decent valuation for its stock over time, this may have not been necessary. Other small NASH companies were able to raise much larger sums of money to fund their trials because they were able to convince the capital markets to give them the needed sums to fully fund a phase III trial without diluting their shareholders into oblivion. Since TH's share price has been chronically low, what they raised in the already heavily dilutive OO was not enough to cover the costs of the NASH trial. We thought they would do another offering when the stock moved higher to get what was needed but, with cancer looking like it will become a real thing, partnerring is the best alternative.
So, the person they apparently hired recently to negotiate partnership deals for TH first project is likely to work on a NASH partnership. We wish them much success but it seems like a challenging assignment. I also got the idea that TH has not yet figured out how they want to position themselves in those negotitations. Any potential partner reading the transcript of yesterday's call is likely to see that. I would have preferred a very specific plan for the partnership be discussed but I got the impression they are just throwing this idea against the wall and seeing what might stick. I did not get the impression they were dealing from a position of strength so my expectations for the terms from any partnership they might eb able to arrange are low at the moment.
I had been thinking there would be another fundraising early next year. This may no longer be needed (depending on the terms of the partnership since TH could theoretically be looking for clinical expertise in this partnership more than money. That may not be likely but if it is true, then they would still need to raise money). It does not mean they won't raise more money because most company management's are prone to do so whenever their stock jumps higher and that could certainly happen as the cancer results come out. But they will not likely need to raise any money. In fact, should the cancer efficacy results be good, they should be able to sign plenty of partnerships in cancer that would almost certainly raise more than the required funds for a cancer phase II.
It also means that my former suggestion that TH should be afforded some value for its NASH asset is harder to justify. The discount I was using just got larger as they will not retain all the economics and the whole way the partnership announcement was talked about leads me to be more skeptical than in the past about NASH. But really, it is just harder to make any assumptions until you know the terms of any partnership they might be able to negotiate.
So, it is all about cancer until we see what terms they may be able to negotiate for the NASH partnership. And it also needs to be factored into the equation that they will not be able to find a suitable partner.
Perhaps the whole long episode with NASH will be, in the end, just a bridge of hope to get us to the reality of a favorabel cancer trial. For long term investors, as longterm himself suggested, we now need to hope that TH does not find a way to snatch defeat from the jaws of victory in cancer too!