Theratechnologies Inc T.TH

Puts and Takes

[SABBOBCAT]

Overall it was a healthy call. Management put on a good show in the face of some ugly content. Time will tell if the boasting of partnerships is real or just smoke and mirrors? 

• Management was blindsided by the trial pause, but also put it all on TH1902. A 5% dilution with no cash proceeds to get the HFS condition removed was steep. This shows that whatever data they were seeing with TH1902 warranted a big bet. Unfortunately that went against us, but there is something to the data/technology or else they would have made such a risky move. This sucks now, but is promising for the future. 
• Marathon is increasing exposure:  rather than force an asset sale to recoup their $40M, marathon decided to increase their exposure. Sure the warrants are cashless, but the $20M draw to repay the converts isn't. I am sure they did their diligence and are comfortable making a $20M bet. Yes they will have priority over shareholders in the worst comes to fruition, but shareholders should take comfort in knowing that Marathon sees value in the warrants and the upside potential of the company. 
• NASH is back. I said this last week and by the tone of the call they are looking to ink a deal this year. The partnership route could be a one path forward that balances a bit of risk for the other party, but then again, why not just by the whole enchilada? Get the commercial assets, pipeline, and tax assets. Perhaps this is what is in the works and that is why Marathon said, "Screw it, give us 5M warrants and we will help you buy time to get the deal done". Maybe Marathon isn't expecting to give the additional $20M? 

[palinc2000]

Did they know that the HFS condition would not be met when the Marathon Financing was signed?  That condition was a self inflected wound which will cause an additional 5 % dilution at a very low conversion price for a 7 year period!!' The non dilutive financing has now become a dilutive financing  

[SABBOBCAT]

I know. That is complete BS in my opinion. I just read the MD&A and the company received a 6 month extension for the HFS submission... I thought they had always communicated that things were running on time with that, so why the delay? It really seems like they put ALL eggs in the TH1902 basket and are now scrambling to recoup lost ground. 

[palinc2000]

I base my evaluation on management on how efficient they are in managing things under their control..In the case of the delay in meeting the HFS condition after agreeing to make it a condition in the Financing I give management a big F