Summarizing the week What a shyte show of posts today…. With a few intelligent exceptions
Kudos to BJ and AP for sussing out the likely motivations of the players involved.
Honourable mention to Hmmm ( Yes I said that) who raised a couple of valid points - but in the end he is a little too stuck on, and overly emotional about what someone may have said or promised in the past ). Circumstances change over time and everyone must adapt to change.
Anyway some brief background before making my main point:
A commonly understood stat is that the cost of managing Sepsis ( spend by US ICUs) is roughly $20B annually.
And that doesn't count the recurring or ongoing costs of sepsis survivors, etc. ( eg see AKI)
What if Baxter, as owner of PMX rights, could cut that cost by say $2, or 3 or 5B annually ?
( making it a no brainer for insurance co.'s, Hospitals, not to mention the loved ones of ESS patients )
And if they could make 70-80% margins as much as $2B in additional high margin sales ( instead of half that) , while doing so, wouldn't they be all over that?
Will Spectral give away the store? Maybe … but I suspect the store price was negotiated well in advance. I am given to understand that this is common practice for drug developers seeking FDA approval ( noting that the costs of some Trials range to well over $1billion USD and for their risk, they need to be fairly compensated ). But the final price is, by definition, uncertain giving cover to any talk of a “ pre-negotiated deal”. . i.e. any pre-negotiated price would necessarily be subject to some, as yet unknown, parameters/ adjustments ( think for example about final ARR which determines device price, or the uncertainty of FDA approval itself, etc.)
I do suspect that things like the size of the target market itself has been agreed upon... with some upside to the buyer for expanded future use - eg myocarditis, etc. Baxter knows the potential better than any other entity. … and they want/need it for their arsenal.
The only uncertainties in my mind are: the possibility of an early trigger pull and, the number of fully diluted Spectral shares o/s at the time of the trigger pull.
Arguments for a slight adjustment to price and pulling the trigger early are:
- The need for some Vantive sizzle
- Time value of money ( duh)
- Avoiding a tiny bit of uncertainty (see JK paper to see just how tiny)
- Avoiding the need for more dilution & annoying goodies.
I feel very secure about this investment no matter the course of the endgame ( which we are now all in) . Especially after the interim milestone confirmation. Very difficult to find high probability of success 2-baggers, let alone 10+ baggers. ( reiterating nothing is certain)
If you can’t handle the heat of short term SP fluctuations ( like this past week) , I hear that GIC’s are a decent alternative ( close to 5% annual ROI these days!)
Have a good night everyone !
MM
PS. Be suspicious of any posting that seems to play into the hands/ motivations of the only two key interested parties that matter.
when there is >$1B involved no stone is left unturned. Or perhaps in this case, if necessary , no stone remains unthrown....at the exact moment they need to be thrown. Glta serious investors.