Response to Finallytherock's AGM Worries I get it,
Finallytherock. The announcement of a relationship with Ladenburg Thalmann, as presented, is causing a problem. It was awkwardly presented. I had to discuss it with a number of shareholders yesterday. The term "liquidity event" was also awkwardly used.
If DrDR and the BoD have seen fit to begin seeking means of winding down or otherwise selling off the company in a fire sale then that, in my estimation, is a material decision on their parts and should not be selectively disclosed in such a cavalier manner as we saw yesterday. Yes, "strategic alternatives" is usually not a good phrase to hear about a publicly traded company. Yes, the utterly complete disappearance of Prothena - without explanation or announcement - is a concern. And, off course, when people leave Bioasis we see the same lack of disclosure despite excited disclosure when those same people were hired. Words like "Cerezyme" disappeared from corporate presentations. Drug program timelines were modified or plunged into obscurity leaving shareholders guessing about their status. Better communication is warranted.
There are shareholder forces at work trying to resolve the whole Bioasis question. Rob Hutchison has always been prepared to sell Bioasis for a low number. There is a broker with many clients deep into Bioasis who feels the same way. It's why I have privately asked for years, "Why can Bioasis not get business deals done? Is there something wrong with xB3?" I've always been told, "Nothing wrong with xB3, still looking great." Of course, Bioasis now has several deals and xB3 continues to prove itself. These shareholder forces ought to sit down and calm themselves. However long they've been invested, Bioasis never got really started until the last 18 months or so. Besides, as IO've always said, they can sell for a buck while the rest of us go for higher numbers. That's what a liquidity event is!!
So let's deal with some of this stuff.
Prothena, I believe, has a license for one drug/disease combination and had time-limited options for three more, then two, drug/disease combinations. It's widely believed that the drug/disease combination they have is for the removal of amyloid beta plaque as a treatment for Alzheimer's disease. I think that Biogen has proven that this strategy is not worth advancing. My guess is that Prothena, who never announced that xB3 program, has quietly dropped it.
Further, I believe that Bioasis finally refused to grant Prothena more extensions on their options unless Prothena paid the agreed upon fees for them. Prothena may not have drugs that they consider worthy of transporting into the brain and decided to let the options expire. If this scenario is correct then Bioasis should address it because it's causing a problem among shareholders and other investors. The question, of course, is whether Prothena or any other xB3 partners or collaborators have discovered a problem with xB3. Bioasis should put that worry to rest, immediately. Bioasis can do that without breaking confidentiality agreements with Prothena or anybody else.
About Ladenburg Thalmann (LT), it was presented by DrDR with excitement and not in a discouraging way. It's pretty tough to brag about the advances with xB3 and relationships with multiple current and potential partners and then to inject fear by talking about strategic initiatives with LT that are as negative as some shareholders are suggesting. All it will take is a deal with one or two of xB3-001, 002, 004, 009 or with drugs in current programs with partners like Chiesi, Aposense, Oxyrane or the others mentioned in the meeting to cash Bioasis up and to drive the share price up and immediately qualify Bioasis for NASDAQ listing approval. Just one or two drugs, that's all.
So why has LT been brought in? I have speculated before that Protalix could be a natural merger candidate for Bioasis. Protalix has immense and economic manufacturing capability but needs IP flow. Bioasis has IP flow but needs development and manufacturing capabilities. The immediate result of such a merger would be that we would all have significant ownership of a NASDAQ company with absolutely blockbuster potential, immediately in the same league as Denali. And, in my opinion, despite the current difference in market cap, Bioasis has far more potential value than Protalix has because of its IP flow. How many more Protalixes are out there? Oxyrane is one with its manufacturing ability. Is that why LT and Shadow Lake are around? That's the message I'm getting from how Bioasis is discussing both.
What about "liquidity events?" The traditional understanding of the term is not a good one. When a share price has been under duress for a long time, shareholders are upset and want resolution of their investment. So when a company finally releases good news that is widely reported, new investors are attracted to the company and they start buying. The share price pops a little. However, the long-suffering shareholders see it as an opportunity for resolution so they start selling. The result is that the share price stalls under very high volume. That is most investors understanding of a "liquidity event."
But, the context in which Bioasis seems to be using "liquidity event" in the AGM presentation is that it's a business deal that brings in sufficient money to make the company financially liquid, a far different and more positive meaning.
Look, I support DrDR, the BoD and what they're doing, but when it comes to public/investor relations, DrDR is about a smooth as stucco. I spend a lot of time explaining some of her pronouncements and lack of explanations and disclosures. It's way better than I considered it to be with Catherine London (Day). Her PRs were full of mistakes, misstatements and poor explanations. I had to write about every damn PR she ever put out except the ones informing us that the financials were out.
I understand how easy it is to be negative about everything. In my opinion, it is truly going to take a substantial bit of news to cause shareholders to be confident. Yesterday's AGM contained many positive elements, but the LT reference and "strategic alternatives" were sufficiently awkward to cause concern.
So you all have a choice. You have to figure out whether Bioasis is moving ahead or into the ditch. What I heard and saw is a description of potential success on many fronts with help being brought in to deal with it. If you want to go south then that's your business. For my part, I'm excited.
jd