MDG share price closed at .45 on Aug 9 for a market cap of $53 million (the stock had a trading range of .465 to .44 on that day) with an average price of .449 in the previous week (on TSX). On Aug 10 the stock is halted to make the following announcement:
Medicago USA Inc., a wholly owned subsidiary of Medicago Inc., has been awarded a $21-million grant from the Defense Advanced Research Projects Agency, Broad Agency Announcement and Defense Sciences Research and Technology to demonstrate the scalable manufacturing of its plant-expressed virus-like-particle vaccines in the USA under a technology investment agreement. Medicago will develop a 90,000-square-foot current-good-manufacturing-practice facility in Research Triangle Park in North Carolina. This state-of-the-art facility will be a large, cost-effective and scaled-up facility for Medicago's VLP plant-based vaccine technology for the delivery of cGMP-grade vaccine. Medicago will scale up and automate its cGMP process to demonstrate its capacity to produce 10 million doses per month of influenza vaccines with the potential for further expansion in the future. This DARPA project is an accelerated and integrated effort to deliver effective production of pandemic influenza in the USA. The accelerated manufacture-of-pharmaceuticals program seeks to identify new ways to produce large amounts of high-quality vaccine protein in less than three months in response to emerging and novel biologic threats. The strategic collaboration is a $42-million project in which DARPA contributes $21-million, Medicago $7.5-million and Alexandria Real Estate Equities Inc. $13.5-million.
With such an announcement one would anticipate a very significant increase to the share price. At the very least the market cap of the company should have increased by the value of the government grant. MDG should have traded to reflect a minimum market cap of $53 million + $21 million = $74 million. That would have increased the share price by 40%. The stock price should have increased to at least .63. That is without crediting any value to the $13.5 million provided by Alexandria Real Estate or the fact that the US government had selected Medicago technology. As stated by the CEO, Andy Sheldon in the news release:
"This DARPA funding is also perfectly in-line with our development plan for both our pandemic and seasonal influenza products as we will now have a U.S. facility ready to participate in the $7-billion pandemic and seasonal influenza markets. In addition, our U.S. facility will provide us enhanced access to the various grant programs in the USA, and we will be ready to take part in these additional funding opportunities."
On Aug 10 Medicago made the following announcement in regards to their funding requirements for the above:
Medicago Inc. has entered into an agency agreement and has carried out an overnight-marketed offering to sell up to 17,283,952 units at a price of 40.5 cents per unit, representing gross proceeds of $7-million. Each unit consists of one common share and three-quarters of one common share purchase warrant. Each full warrant will have an exercise price of 50 cents, exercisable for a period of five years following the closing date of the offering. The offering is being conducted by Dundee Securities Corp. and Paradigm Capital Inc. as agents, and Roth Capital LLP and Bloom Burton & Co. as members of the selling group with respect to the offering. The offering is effected in each of the provinces of British Columbia, Alberta, Ontario and Quebec by way of a prospectus supplement to Medicago's base shelf prospectus dated July 7, 2010.
Medicago intends to use the net proceeds from the offering to finance its participation to the cost-sharing program pursuant to the technology investment agreement following the award of a $21-million funding award from the Defense Advanced Research Projects Agency previously announced in Stockwatch on Aug. 10, 2010, and for other general corporate and working capital purposes.
The stock had been halted and had not traded on news of ether the US grant for the US facility or the private placement financing.
The halt was removed at 11:15 am PT (2:15 ET) Aug 10. Over the 1 hour and 45 minutes the stock traded 2.3 million shares on the TSX and closed at .38 down .07 a decline of more than 18%. 2.3 million shares traded in 1 hour and 45 minutes at an average price of .386 with Anonymous as the biggest net seller.
|
House Positions for C:MDG from 20100810 to 20100810
|
|
House
|
Bought
|
$Val
|
Ave
|
Sold
|
$Val
|
Ave
|
Net
|
$Net
|
|
80 National Bank
|
469,400
|
184,062
|
0.392
|
10,000
|
3,800
|
0.38
|
459,400
|
-180,262
|
|
9 BMO Nesbitt
|
245,800
|
95,254
|
0.388
|
104,500
|
43,587
|
0.417
|
141,300
|
-51,667
|
|
79 CIBC
|
172,200
|
66,130
|
0.384
|
35,300
|
13,724
|
0.389
|
136,900
|
-52,406
|
|
19 Desjardins
|
120,635
|
47,511
|
0.394
|
0
|
|
120,635
|
-47,511
|
|
2 RBC
|
160,100
|
61,534
|
0.384
|
50,000
|
19,725
|
0.395
|
110,100
|
-41,809
|
|
99 Jitney
|
78,500
|
31,580
|
0.402
|
0
|
|
78,500
|
-31,580
|
|
33 Canaccord
|
44,000
|
17,140
|
0.39
|
10,000
|
3,800
|
0.38
|
34,000
|
-13,340
|
|
6 Union
|
20,000
|
7,600
|
0.38
|
0
|
|
20,000
|
-7,600
|
|
89 Raymond James
|
20,000
|
7,823
|
0.391
|
0
|
|
20,000
|
-7,823
|
|
81 HSBC
|
17,300
|
6,539
|
0.378
|
0
|
|
17,300
|
-6,539
|
|
58 Qtrade
|
14,000
|
5,320
|
0.38
|
0
|
|
14,000
|
-5,320
|
|
36 Latimer
|
7,600
|
2,892
|
0.381
|
3,935
|
1,545
|
0.393
|
3,665
|
-1,347
|
|
22 Fidelity
|
3,000
|
1,240
|
0.413
|
0
|
|
3,000
|
-1,240
|
|
15 UBS
|
2,000
|
760
|
0.38
|
0
|
|
2,000
|
-760
|
|
124 Questrade
|
6,000
|
2,355
|
0.393
|
9,500
|
3,585
|
0.377
|
-3,500
|
1,230
|
|
46 Macquarie
|
230,000
|
87,775
|
0.382
|
262,800
|
101,813
|
0.387
|
-32,800
|
14,038
|
|
7 TD Sec
|
401,800
|
153,329
|
0.382
|
528,500
|
200,366
|
0.379
|
-126,700
|
47,037
|
|
85 Scotia
|
65,200
|
25,431
|
0.39
|
256,500
|
97,490
|
0.38
|
-191,300
|
72,059
|
|
1 Anonymous
|
249,000
|
94,699
|
0.38
|
1,055,500
|
409,539
|
0.388
|
-806,500
|
314,840
|
|
TOTAL
|
2,326,535
|
898,974
|
0.386
|
2,326,535
|
898,974
|
0.386
|
0
|
0
|
Since Aug 10 14.5 million shares have traded with the average price reducing further to .369. It appears very obvious that the price of this stock is being controlled. Anonymous continues to sell into the market with the majority of those trades being in the form of iceberg`s. In addition Paradigm has crossed 3.2 million shares at an average price of .367.
|
House Positions for C:MDG from 20100810 to 20100910
|
|
House
|
Bought
|
$Val
|
Ave
|
Sold
|
$Val
|
Ave
|
Net
|
$Net
|
|
80 National Bank
|
2,646,253
|
985,334
|
0.372
|
321,120
|
116,878
|
0.364
|
2,325,133
|
-868,456
|
|
19 Desjardins
|
1,431,153
|
525,961
|
0.368
|
65,700
|
23,703
|
0.361
|
1,365,453
|
-502,258
|
|
2 RBC
|
1,346,772
|
493,873
|
0.367
|
481,850
|
174,991
|
0.363
|
864,922
|
-318,882
|
|
81 HSBC
|
301,200
|
111,310
|
0.37
|
0
|
|
301,200
|
-111,310
|
|
99 Jitney
|
449,600
|
166,131
|
0.37
|
246,600
|
89,682
|
0.364
|
203,000
|
-76,449
|
|
33 Canaccord
|
230,400
|
85,414
|
0.371
|
101,500
|
36,216
|
0.357
|
128,900
|
-49,198
|
|
124 Questrade
|
111,038
|
41,211
|
0.371
|
9,500
|
3,585
|
0.377
|
101,538
|
-37,626
|
|
48 Laurentian
|
48,167
|
17,986
|
0.373
|
0
|
|
48,167
|
-17,986
|
|
85 Scotia
|
522,052
|
192,934
|
0.37
|
478,472
|
179,339
|
0.375
|
43,580
|
-13,595
|
|
5 Penson
|
39,500
|
13,842
|
0.35
|
0
|
|
39,500
|
-13,842
|
|
22 Fidelity
|
22,800
|
8,485
|
0.372
|
0
|
|
22,800
|
-8,485
|
|
58 Qtrade
|
16,500
|
6,245
|
0.378
|
0
|
|
16,500
|
-6,245
|
|
37 MacDougall
|
10,000
|
3,650
|
0.365
|
0
|
|
10,000
|
-3,650
|
|
36 Latimer
|
49,098
|
18,002
|
0.367
|
42,041
|
15,475
|
0.368
|
7,057
|
-2,527
|
|
25 Odlum
|
6,000
|
2,160
|
0.36
|
0
|
|
6,000
|
-2,160
|
|
64 Octagon
|
11,500
|
4,455
|
0.387
|
6,500
|
2,429
|
0.374
|
5,000
|
-2,026
|
|
15 UBS
|
2,000
|
760
|
0.38
|
0
|
|
2,000
|
-760
|
|
16 Paradigm
|
3,200,000
|
1,173,250
|
0.367
|
3,203,500
|
1,174,527
|
0.367
|
-3,500
|
1,277
|
|
9 BMO Nesbitt
|
1,033,768
|
382,649
|
0.37
|
1,038,161
|
377,678
|
0.364
|
-4,393
|
-4,971
|
|
6 Union
|
27,000
|
10,190
|
0.377
|
34,700
|
13,101
|
0.378
|
-7,700
|
2,911
|
|
141 Bolder
|
0
|
|
20,000
|
7,050
|
0.353
|
-20,000
|
7,050
|
|
27 Dundee
|
63,000
|
22,435
|
0.356
|
98,750
|
36,367
|
0.368
|
-35,750
|
13,932
|
|
89 Raymond James
|
40,000
|
14,898
|
0.372
|
87,500
|
33,037
|
0.378
|
-47,500
|
18,139
|
|
79 CIBC
|
370,400
|
137,515
|
0.371
|
431,200
|
159,514
|
0.37
|
-60,800
|
21,999
|
|
7 TD Sec
|
1,523,793
|
557,468
|
0.366
|
1,587,600
|
591,483
|
0.373
|
-63,807
|
34,015
|
|
78 Salman
|
0
|
|
90,000
|
34,046
|
0.378
|
-90,000
|
34,046
|
|
46 Macquarie
|
370,000
|
138,175
|
0.373
|
575,800
|
217,016
|
0.377
|
-205,800
|
78,841
|
|
1 Anonymous
|
597,500
|
222,834
|
0.373
|
5,549,000
|
2,051,050
|
0.37
|
-4,951,500
|
1,828,216
|
|
TOTAL
|
14,469,494
|
5,337,167
|
0.369
|
14,469,494
|
5,337,167
|
0.369
|
0
|
0
|
This company does not have a history of significant shorting as many would conclude that the VLP technology owned by this company has significant value well beyond the current market cap. Paradigm Capital has increased their share price target from $2.00 to $2.50.
|
|
|
Symbol
|
Report Date
|
Volume
|
Change
|
|
|
|
|
MDG - T
|
2010-08-31
|
150,384
|
-2,163,265
|
|
|
|
|
|
|
MDG - T
|
2010-08-15
|
2,313,649
|
2,307,016
|
|
|
|
|
|
|
MDG - T
|
2010-07-31
|
6,633
|
2,657
|
|
2.3 million shares were shorted following the news and then the short was covered. Presumably this action was taken in order to replace funds that were required to finance the private placement. If that conclusion is correct then this action of shorting MDG amounted to the market financing the private placement to a degree by the purchase of common shares traded over that time period. Interestingly the stock has failed to recover as the selling activities continue. This may be due to the continued action by those who bought the private placement to sell common shares to recover part of the private placement costs.
On Aug 31 MDG released the following News (I provide only the headline here):
MEDICAGO NAMED IN PRESIDENTIAL REPORT ON MEETING THE CHALLENGES OF PANDEMIC INFLUENZA
On Sept 8 MDG released very significant news as follows:
MEDICAGO ANNOUNCES A SINGLE LOW DOSE OF ITS H5 VLP VACCINE ACHIEVES 100% CROSS-PROTECTION IN LETHAL CHALLENGE STUDY IN FERRETS
A single low dose of Medicago Inc.'s pandemic vaccine formulated for the H5N1 Indonesia strain of Avian flu provided 100-per-cent cross-protection in ferrets against a lethal challenge with the highly virulent Vietnam influenza virus. H5N1 vaccines are known to require repeated administrations to elicit an antibody response. Medicago is believed to be the first company to demonstrate full cross-protection in a heterogeneous challenge with only a single dose of its H5N1 vaccine in the ferret model.
Medicago successfully completed a phase I clinical trial for its H5 VLP vaccine in December, 2009, and will be initiating its phase II clinical trial next quarter. During this time, the company continued to further explore the immune response of its VLPs through additional animal studies to better understand the strength of its product.
In this study, ferrets were vaccinated with a single 1.9 (micro)g dose of the company's clinical-grade VLP vaccine made for the Indonesia H5N1 Avian influenza virus (A/Indonesia/5/05). Animals were then challenged with a lethal dose of the Vietnam influenza virus (A/Vietnam/1203/04). All the vaccinated ferrets survived the lethal challenge while all non-vaccinated ferrets died within seven days. As the influenza virus replicates in a similar way in ferrets and humans, and causes similar symptoms and disease, these protection data are highly significant.
On Sept 8 when this significant news failed to have any impact on MDG`s supressed share price I voiced my concern in the form of an email to MDG IR Manager as follows:
Hi Christina,
I am a longer term shareholder and currently hold 853,000 shares. Congratulations on the recent news regarding the US facility and US funding and the news released today. I have significant concerns that all this great news has not been reflected in the share price. Anonymous has been selling relentlessly into the market and over the last 30 days has sold over 5 million shares. Are you aware of the motives behind this steady selling? Regardless of the motives would you please contemplate instituting a shareholder rights plan. At the very least this would signal to the market that your share price does not reflect the current value of this company. Potentially this relentless selling pressure is designed to hold the share price of this company down in preparation of a low takeover bid?
The response I received back from Cristina is as follows:
Thanks for your continued interest in Medicago. Thanks also for the congratulations… it has been a very busy and productive time for us at Medicago. The grant with the US government further validates our rapid and cost-effective technology and allows us to build a state-of-the-art commercial grade facility… a facility that we needed for PIII and commercial development. This facility will also enhance our ability to garner additional grants from the government agencies.
With being a public company, we unfortunately do not control the short term fluctuations in our share price. We only have control in building value in the Company that we believe will inherently be reflected in the share price in the longer term. At this time, we do not feel the need to institute a shareholder rights plan. We know our major shareholders and we feel this is the best approach for us right now.
We will continue to build the value in our Company and we look forward to keeping you updated on our progress. If you would like to discuss anything further please feel free to call. Thanks! Christina
My conclusion is that the stock price of this company continues to be suppressed in order to facilitate a high volume of trades to recover finance costs from the last private placement.
In my opinion the last private placement was done well below the fair value of the share price given the positive developments by the company.
Currently a small group of shareholders representing a significant number of shares are contemplating steps to launch a formal investigating into the trading activities of this company since the announcement of positive news of US funding and further subsequent positive news releases in regards to MDG business.