SPCEO1 wrote: THTX is in need of a few wins, don't you think? So, if THTX is fortunate to see good early results in the restarted trial, the urge to share those will no doubt be quite strong. Given they are breaching liquidity covenants on their loan, the incentives are in place to share any good results. Indeed these are really, really strong incentives as this could help them raise money at more respectable terms and get the loan back in good order. There is little constraining them from sharing any good info with investors as it is an open label trial. Often they want to hold good info for a conferencepresentation but I think the incentives currently lean heavily towards getting good info out as quickly as possible. Remember too the board was legitimately worried about losing their seats prior to the AGM. My conclusion is they will be happy to tell us good news pretty soon after it is confirmed. My guess is October would be the earliest time for that to happen if it were to happen.
I don't know exactly how things will proceed from here on but let's look at the set-up, which indicates big things are more likely to happen at THTX than not:
1.) They just had to cut revenue guidance significantly when they confidently told investors at the Q1 conference call that the 2023 sales guidance was still attainable. Just about every meaningful forecast they have made about anything has not come to fruition. They are naturally feeling heat from shareholders and likely would feel it themselves even if external forces like sharehollders and those loaning them money were not turning up the heat on them. There is a lot of incentive for THTX to do something to alter the negative narrative.
2.) The breached the net liquidity covenant of the Marathon loan and it remains an unresolved situation with a deadline to come to some sort of agreement on 7/28. So we know they have less than $20 million in cash right now (as I projected earlier). It is hard to see that going on much longer. And even if the company does get the F8 formula filed with the FDA by September, there is no guarantee the FDA won't dawdle and not get it approved by the end of the first quarter. If that were to happen the net liquidity covenant goes from $20 million to $30 million and it was this factor that led to the qualified opinion of their 2022 results. So, the board meetings around all of this muct be interesting theater.
3.) Several board members could have been easily tossed at the last meeting had my group not voted for them. Thus far there has been little indication THTX is taking the recommendations we offered when we discussed how we would vote our shares.
4.) Jones Research participated in all recent conference calls but has oddly not yet published a report.
5.) The need to start paying back the principal on the Marathon loan is now just one year away. I suspect they would like to pay the entire loan off at that point and likely would do so if they have enough success in the TH-1902 trial to push the stock price significantly higher from which they could raise some serious money.
My best guess is something of significant magnitude is likely going to happen between now and 7/28. It will likely include raising new money (unless the conversations they said they are having about TH-1902 with other payload drug companies result in signiificant upfroont cash payments in the next week or so) and I am guessing Jones Research will take the lead on any share issue they might undertake.
They ahve an immediate need for say $110 miillion in cash to take care of the short term $20 million liquidity covenant situation. They have a need for roughly $25 million for the potential breach of the $30 million liquidity covenant at the end of Q124. They have a further need for $60 million in additional cash by July 2024 if they want to pay off the loan before the principal payments start. Given the cost of that loan they certainly would like to pay it off early.
So, I think we are going to get some sort of good news in the next two weeks that they leverage to do an offering off of and get things right on the net liquidity covenant. How much they raise will be a function of how confident they are about TH-1902, if they raise any partnership upfront cash and how risk averse they are. They could raise just enough to satisfy the $20 million breach, they could choose to raise enough to take care of the possible $30 million requirement. Or they could raise enough to be in position to pay off the Marathon loan next July. Of course, if TH-1902 produces good results, then they should be able to raise considerable sums via partnerships and not have to rely on share offerings. But since they have irritated so many shareholders and almost lost their jobs, they do have an incentive to dilute those angry shareholders to lessen the threat of being voted out.
Obviously, the responsible approach for the board to take is to raise a little money soon to take care of the breached liquidity covenant and raise more following successful TH-1902 results. The fact they did not use the ATM or do any other small share offering ahead of the breach they knew was inevitable indicates to me they have a degree of confidence they will sign a partnership agreement on TH-1902 that has some upfront cash coming with it. Marathon playing nice with them (so far at least) also tells me this might be the case as THTX surely would have gone to them and said, "look these partnership discussions are on a very good track but we cannot wrap them up before we violate the net liquidity covenant - can you give us another month or so to get this sorted out?"
Anyway, those are some thoughts about the current situation. They are certain to be incorrect in many ways but are probabally directionally correct given what we do know.
LouisW wrote: I dont think so. Paul clearly said that "We plan to keep the market well informed of our activities and intend to announce trial recruitment updates throughout the remainder of the year. At the pace we're going, we believe that by the end of the first half of fiscal '24, we will be able to announce preliminary safety and efficacy data."
I believe they would update the progress of recruitment by the end of yar and update the preliminary efficacy in 1H2024.