RE:RE:RE:Speechless - Fire them all, really.Marathon has 5 million warrants priced at $1.45 so they are aligned witht us as long as the situation with THTX does not devolve into a situation where the company sales collapse and Marathon is left to finding whatever funds it can to get its principal repaid. Say TH-1902 gets good results in the restarted trial and the stock jumps to $5 per share, something which clearly could occur, Marathon would be looking at a profit of nearly $18 million on top of the massive interest they are making on this deal. As long as the legacy drugs are performing well enough and cancer has promise, our interests are largely aligned with theirs. It is only in a worst case scenario where they diverge and if that scenario actually develops then we are toast anyway.
So, yes Marathon is in front of shareholders but they are still very much aligned with our interests right now. They may be even more aligned after whatever final agreement is reached for this lastest breach of the loan terms. I don't believe anyone needs to worry too much about the disaster scenario at this point unless you think the FDA is goign to pull Egrifta off the market or something of that magnitude. There is a bigger risk that a hostile bidder come in to buy the cancer IP on the cheap than for Marathon to forceably sell the company to get its loan paid off.
On the issues that don't make much sense to shareholders consider these things:
1.) The staff that is unfortunately being laid off now was likely needed to complete the IM trial/submission, the F8 trial/submission, the human factor study, and likely thoses that did a lot of testing on various Sort1 options the company could pursue. Also, had the company known in advance about the inventory and rebates issues, they likely would not have issued the guidance they did. Predicting the future is hard - I know since I do it for a living. No on ever gets it completely right for more than a short period of time.
2.) The restart is going to be less than a month longer than expected - that is both not a huge deal and normal in the world of drug testing.
3.) I actually agree that cost cutting should have started earlier but admit that I do not know all the details as to why they were hesitant to do so. It could be bad management but it is more likely they just beleived their forecasts and thought the covenants would not be breached. They had reason to believe those forecsts as well because the prescription growth was looking so good (and still does)
4.) They did not write-down any inventory. Their distributors just ahd acquired too much product and thus did not need to order as much new product as they slowly worked their inventories lower. The bad management of inventories seems to have been at the distributor level, not at the THTX level. Still, they should have had a a better handle on those inventories at the distributor level (and apparently now do).
5.) Communication issues - This is a definite weakness of management. When they stop steering into every pothole in the road, communication will become better as it is easier to communicate good news than bad.
6.) Sales Guidance - I can offer no defense for this. They have just mucked it up every single time they have offered guidance and that is hard to do. It is all part of their communication issues.
The 28th is an important date as that is when they are currently scheduled to sort out the current breach with Marathon. Marathon can up the interest rate on the debt by 300 basis points. Maybe they will opt for more warrants. Maybe they will do nothing along those lines since they want to give the 5 million warrants they already have the best chance of paying off in a big way. One thing I feel confident is saying is they will not be selling the company off to get their $60 million back now. The circumstances and incentives in place simply do not justify that.
PWIB123 wrote: I don't think we are aligned with Marathon in any way shape or form if and when it comes down to payment default. They are a SENIOR SECURED LENDER. I went back and read the credit agreement. While I scanned it quickly and didn't actually see a specific section that outlines exactly what the collateral is, there is reference to UCC filings (which are presumably on all business assets), control agreements for the cash accounts, mortgages on any real property, control over patent agreements and licensing arrangments, and are in control of any dispositions, mergers, acquisitions, etc.
Marathon is in front of all shareholders, and while THTX may be able to go back to the well to raise more equity capital, in the event they cannot, it looks to me like Mararthon could essentially force the sale of the company to another larger pharmaceutical with only their interest at stake of getting repaid the debt. If the underlying value of the legacy drugs plus the patents on pipeline opportunities really are as valuable as suggested here, it seems to me that while messy, if Mararthon has access to and knowledge of other pharmaceuticals, that they could ultimately with the court's approval through bankruptcy still facilitate a direct sale that would wipe out shareholders.
It would be costly, time consuming and a bad day for everyone, but Marathon definitely has less to lose than we do.
There are things I cannot comprehend that others have expressed here. Waiting so long to begin cost cutting. The re-start to the trial appears to be taking longer than it could have. The now second miss on the loan covenants, in part due to not beginning the cost cutting soon enough. The huge write-downs on inventory that could be a by-prroduct of poor financial controls and inventory management. The bizzarre communication and weird IR issues. The sales guidance misses. Tough to argue there aren't some management issues here.