RE:Surprised At $1 ($0.25 pre split), the company was being priced for bankruptcy with a $25mm market cap and $60mm EV, less than 0.7x sales. It was on the way to giving the company to Marathon. At $2.50, the EV is still right around 1x sales, which is a depressed level. The news that they have over $20mm in cash (satisfying Marathon loan covenant) and achieved their adjusted EBITDA goals early was an important revelation wrt the company's solvency and potential for recovery, which allowed us to go from bankruptcy valuations (highly volatile, chance of zero) to simply very depressed. Next phase could potentially be a return to 1.5-2x EV/sales and some detail about being close to free cash flow positive. FCF positive would be an important step - it gives the company a lot of time, even with the expensive debt. Time is something many early stage biotechs don't have, which was one of the original attractions to the investment - the legacy business. That says nothing of TH1902 or Nash, and gives zero credit, but there isn't much to say there yet. But if the market thinks the company will survive and there are any positive data points there, perhaps a small probability and value will be given which could have a large impact on the enterprise value of the company, all of which would go to the equity.
Taking on this expensive debt was clearly a bad idea, at least in hindsight, but perhaps there are enough cost levers to pull to make it work, and if so, this is a highly levered equity at depressed valuations which can have big moves. Still half of the EV is net debt right now.