My estimate on extra dilution from offeringYou may recall that as debate swirled around the offering in Feb, I was of the opinion they had enought cash to go for 6 more months and see where the share price would be. I said that I would look at it in July and see if, in fact, they could have done better. In hindsight, we know that raising that money allowed them to accelerate oncology and corporate structure, etc... So I concluded a while back they were right to be conservative and do it, but that their lack of solid corporate finance skills and contacts in the US gave them terms that could have been improved upon and solidified analyst coverage. Whatever the case, I'm over it but I did say I would run the numbers in July to see what could have been if they waited. So here's the accounting to keep it fair.
I'm just going to look at what amount of extra shares were issued in the deal (assuming the warrants would issue the same amount in any deal) and not adjusting today's price for the additional share dilution (in other words, the money coming in allowed them to pursue the pipeline ramp which increased the market cap and it reflects mostly the cash raised. So our "old shares" would not be 20% higher than today's price).
The math is that the deal was done at a 12.7% discount to the market. If they used a price of $3.50, a 12.7% discount would be issuing shares at $3.05. To raise the same $46mil, they would issue 15.05mil shares. That is 1.7mil fewer shares than done in the deal. You could say the warrant would also be 850,000 warrants less (since it was 1/2 warrant per share). So the OO ultimately cost old shareholder an additional 2.5mil shares if you think they could have waited till today to do a deal at a 12.7% discount to $3.50 price. So an extra 2.5-3% dilution from doing it when they did. I think we more or less roughly assumed the deal added an extra 10-15% dilution to what we felt was "fair". Looks a lot less given the share has not zoomed up to $5 or more by now. So not as bad as we all thought.
To me, we can put the OO to rest at this point given developments both strategically and where their share price is 6 months later.