SPCEO1 wrote:Lots to discuss on this but first, you may now rise from your bow!
I think you are aware that the equation surrounding go it alone versus a partnership is much more complicated than just 100% versus 15%. Frankly, no one has anywhere near enough info to model what the parntnership means right now as it could take so many forms. The company did itself no favors by not outlining at least a little of what they are looking for in terms of the nature of the partnership and the likley timing of it. So, I personally am not going to waste time trying to build a model when the many aspects that go into it are complete unknowns. But 100% of revenues with all the risk and costs coming from a small company that has not actually done any NASH tests before doing a registrational trial may have a lower risk adjusted NPV than getting a straight 15% from a highly experienced NSH parnter with little or no costs attached to it. They will almost certainly get some significant value from a NASH parntership (which should prove to eb a market moving event since the market is assigning no value so far as best I can tell) but none of us really knows when or what form that partnership may take. The ATM may be telling us they are prepared to take some of the financial risk to get a larger finanial return but they have not been clear about that either.
Also, to me the real message of the NASH partnership pivot is that cancer is looking really, really good. But that is just speculation as the company hasnot really said anythignt o back that up.
I think there might have been one of those awkward spell check fixes at the end of your second paragraph or I just misunderstand what you are saying there.
It has been an incredibly crazy ride in THTX. Certainly creazier than it should have been. I would have hoped with new management things would improve ont hat front but so far it is just as wild. While acknowledging that wildness, I still really cannot figure out why it has been thus. It is not like the company has made a bunch of awful decisions. I largely agree with all of their moves (ex the OO/NO obviously). In fact, I cannot believe we are sitting on a general NASH asset that has a decent chance of freeing up a lot of resources for the company down the road when I was just looking for a HIV NASH add on to their current product mix a couple of years back. That is an incredible win and somehow they have managed to get no credit for it at all. On cancer I have been a hopeful skeptic until they got me some phase I data. I think I am just hopeful now and no longer as much of a skeptic because all the hints we are getting are positive about cancer. Like the analysts it is hard to model what cancer might mean right now since it is still so early but it is not too early to realize it could be a very, very big deal and it could happen pretty fast too.That is why the stock price seems to have an option value in it for cancer despite the analysts not yet putting any models together on cancer (also, I should mention that TH threw out a $12 billion market size number earlier this year for cancer and Wino has rightly highlighted what an analyst coudl do on cancer if they wanted to - and he already did the work for us).
It has been a nutty ride - way nuttier than it seeminglys hould have been. I still can't fully figure out why that is the case exactly but improved shareholder communications probably could not have smoothed it a bit. NASH, unlike cancer, gets no value from the market and much has to do with the odd way they got to the current place and the unwillingness to discuss their evolving NASH asset frankly over time. I think when you pull a rabbit out of your hat like NASH, you really need to sell it heavily as it is hard to believe what they pulled off there.
If THTX does turn into a cancer commpany then perhaps things will get a bit smoother as that will hopefully be much less difficult for investors to follow and should allow the company to much more easily attract good analysts to. If they screw that much easier job up, then I give up!
qwerty22 wrote: I bow to your experience on the machinations of the investment industry, it's always interesting to read. I'm not the expert but if he built his NASH model on thtx getting 100% of sales and now it's 15% then technically something big did just change. Are you not doing a similar thing to your NASH model?
I accept your description of the relationship, I accept he got sales completely wrong. I also agree he was the best on NASH. Maybe he's irrelevant to the story going forward so winning more like Canaccord is the right thing to do.
The last 2 years have been crazy. Massive wins, multiple pivots, lots of ugliness. It feels like a company going through the convulsions of a restructuring, rebranding or re-imagining. Let's hope that's finally ending, these are the last convulsions. I embrace the idea you've come up with that they may end up simply being an oncology stock, I don't think that's exactly what you imagined when you first saw the transition coming, it's not the way I saw it.
SPCEO1 wrote:It was odd that he did not write a report on the quarter in a timely fashion. My guess is there were negotiations ongoing about the ATM and Canaccord was being considered. Given Canaccord's inability to bring any new investors to THTX, despite his favorable coverage, it seems rational to me for THTX to have tried something else. And it is rational for Canaccord to be ticked off about that.
I don't think their analyst believed his earlier sales numbers anyway and had put them in place as part of positioning to get the January deal. This analyst is not a dumb one. He is actually pretty smart. Smart enough to know that the best way to keep his highly compensated job is by doing deals.
The word salad he offered as an explanation of such a dramatic target price reduction highlights there was more to this change. And we know that nothing has actually happened that would justify such a change. Trust me, Wall Street has been my gig for a long time. This is more about not getting the deals.
qwerty22 wrote: It seems to me he's done the reset on some of the aspects of the business that you want, maybe his motivation is less important than that basic fact.
He certainly has somewhere to go on his appreciation of cancer giving that is at zero.
This is his new baseline. It's been an ugly process getting to it but it's something to build from.
SPCEO1 wrote:There really was no rationale and how could there be? Nothing is going on at THTX that even remotely justifies such a price target cut. He, and/or his Canaccord bosses, are no doubt just ticked off he did not get the lead on the January share offering nor the ATM. It is just Wall Street doing its vindicitive thing.
Again, I think you are too extreme in your negative thoughts on NASH. But, pushing that aside for now, the big problem he faced was his absurdly high sales estimates for THTX. He brought these down without really mentioning it, a common approach for analysts when they are embarrassingly wrong. But his boss likely said, "look, if you are reducing your sales estimates by so much you can't keep such a high price target." He is assuming a 15% royalty rate on NASH an a one year delay on testing and sales starting.
The analysts cove