Theratechnologies Inc T.TH

National Bank Comments

[archeo753]

National Bank on Theratechnologies' Tapering Non-core R&D Activities

MT Newswires - Oct 24, 2023 1:33 PM EDT

01:33 PM EDT, 10/24/2023 (MT Newswires) -- Theratechnologies announced Tuesday that it will be tapering R&D activities not directly tied to its commercial platform/products, which will free up ~US$3.5 million in annual costs (with a US$1.5 million restructuring charge in fQ4). R&D will focus on supporting TH's commercial platform while development on the projects that will be wound down will be through partnerships. Note that the fully funded and ongoing Phase 1 oncology trial will be allowed to complete at which point TH will seek a partner.

Takeaways

Given the risks and costs associated with TH's early-stage R&D, National Bank has been advocating for a focus on commercial activities. Hence, TH's goal and actions to become a profitable organization are, in analyst Endri Leno's view, "positive and sensible moves."

Maintain Sector Perform rating and C$5.50 target

We are maintaining a Sector Perform rating and C$5.50 target based on a 1.5x EV to FY+1 Sales multiple.

Price: 1.80, Change: -0.13, Percent Change: -6.74

[palinc2000]

Spceo could you post research reports ftom others

[SPCEO1]

NBF is the only firm that wrote anything on that news. The market cap of THTX is about $37 million - it actually still gets more coverage at this point than I would have thought it would. But it doesn't make economic sense for analysts to spend much time on it at this time. Hopefully, TH-1902 will work really well and that will change. Until then, however, news like that in yesterday's PR

[juniper88]

" I think investors may be too concerned about THTX going belly up" Maybe the Paul and the board are concerned. Why else this Offering?  Or maybe they just don't give an iota about the current share holders.  I wonder how Soleus is feeling about their investment right now.

[Trogarzon]

No they are in deap sh t and we are now certain to never see our money back... 

[Trogarzon]

I don<t get it and it<s a certainty they will lose teh Nasdaq listing now.. I don<t get it...

[SPCEO1]

They are trying to raise $25 million at $1 per share according to Cantor. That is diluting us by about 67%. Hard to believe the stock will hold $1 though maybe the deal doesn't get done.

[juniper88]

Rusty, any idea why this is being done? Is there anything we can do? 

[SPCEO1]

Sell our stock and crush the share price? Maybe then the deal can't be completed? Remember, I pitched a straight preferred with a tiny equity component to them, which would not have been dilutive, and they ignored that and opted for this instead.

[Trogarzon]

This is the result of a mismanaged company under the governace of these people and Board. It is over.

[palinc2000]

Sell our stock and crush the share price? Maybe then the deal can't be completed? Remember, I pitched a straight preferred with a tiny equity component to them, which would not have been dilutive, and they ignored that and opted for this instead. Spceo I hope that your suggestion above is not what you really think..... That makes no sense    

[juniper88]

I had that thought, but after I sell all my shares why should I care whether or not the deal goes through.  And we have no idea what they need the cash for. I can only think of them buying some bolt on medicine to market.   Else this is ludicrous if not outright evil.

[SPCEO1]

Maybe a better deal that does not crush loyal shareholders can be arranged. One has to think they are trying to dilute us to avoid the potential consequences of shareholder revolt. But if this deal fails, a better solution for the shareholders they are crushing could potentially be put together.  I am not sure how committed Cantor is to defending that $1 target price. I doubt they are very

[Trogarzon]

One has to come to the conslusion that they had no better option. Plain and simple, lack of better option and some king of existantial issue at stake.  What else really.  This is the best they can do without a deal of somekind, without succes in their trials, without meating their sales guidance.  This is it.

[PWIB123]

I cannot dream of how this deal will go through.  The stock is for sure going under $1 again after a 4-1 reverse split.  Knowing you pitched another better solution that was ignored makes this even worse.  We have to take action against the leadership before they completely destroy this company.  Can we take next steps to gather support to call a special meeting?  Can we

[PWIB123]

This company is ran by fools. Once again, Paul misled with his comment yesterday about oncology and NASH being completely funded in the future by a partnerhsip.  This incenuates that they would focus on business as usual with legacy drugs and need no additional capital for cash flow.  And now this.  The very next day a capital raise with no explanation and the worst possible timing

[scarlet1967]

They just renegotiated with Marathon so the minimum equity is now between $15 and $20 millions, as of end of August  they had about $23 millions , the reduced annual sales were confirmed at about $82 millions, the recent cst cutting /lay offs...so they don't need any extra capital anytime soon yet they are trying to raise some $25 million? Why now at these valuations? Whats the urgency

[scarlet1967]

Can anyone clarify why suddenly they need the funds? When companies raise money they follow that up with intended use of funds! Not long ago the CFO said the low valuation was not justified, since then the layoffs now this without any explanation? Talking about poor communication...

[palinc2000]

Use of proceeds is not specified.... Maybe the proceeds will be used to get rid of Marathon

[Mannequin]

why would you get rid of marathon when it will cost you 2/3 of the company to do it? Well because if you don't own any shares like the management doesn't then why would you care?    

[Trogarzon]

Writoff.. .. goudby Charlie... 

[mikeq113]

One day after Paul emphasized their commitment to shareholder returns...this is pathetic.  This makes no sense to me but I'm likely out tomorrow morning. Over 300k shares post-split and I'll walk away with a tax loss large enough to last me most of my life. 

[SPCEO1]

I and some friends voted our shares in favor of management and the board last May after speaking to the Chairwoman and making some suggestions about what we wanted to be done. THTX happily took our votes and ignored our suggestions. So, each person can make their own judgment about that. The we tabled the preferred stock option and basically were ignored. Everyone can make their own judgment

[Trogarzon]

Ok then.  Count me in if it does.

[Trogarzon]

Well some people don't like to be screwed I suppose.

[juniper88]

I can't see how keeping this board and management can possibly be in the best interest of the shareholders.  When they did the OO they threw then current shareholders under the bus. They now did the same to soleus also. I guess these new investors are a bit smarter in at least getting a seat on the board.

[PWIB123]

What's the end game though?  No one invests unless they think there is upside.  A board seat requirement at this stage is to protect an investment.  Obviously, the fact they are accepting the new forced board seat is admitting failure.

[mikeq113]

This assumes Soleus is still around. They may have already exited given how substantial the selling was around the reverse split. 

[Trogarzon]

It's very confusing to say the least.  The deal is in USD with the Goverment of Quebec Investement arm brokered trought Cantor. I don't understand how they can do such a deal without giving more information. Like every normal deal I saw before.  Hey maybe we know more tomorrow. For now it<s more like WTF just did happen.

[Lee430]

Okay trying to be positive here so I have a bottle of Champagne ready for a GREAT! PR tomorrow morning explaining the amazing new master plan, otherwise I will be taking a deep dive into the tequila bottle….Seriously though I am the only one to blame for my losses but duping investors to get their votes is at the least unethical and speaks volumes about them.

[Trogarzon]

When you look at a 1M dollard investment worth 50k and that tomorrow it's worth 30k... well you say f..ck it that's all.  And then you call it for what it is a writoff.

[SPCEO1]

Were we duped? I don't think I would say that. We did not require they do as we asked to get us to vote so we knew they could do what they did. We just hoped they were not like that. We try to see the best in folks but in this case we are apparently seeing self-interest put before shareholder interests.

[juniper88]

My point was more like "buyer beware". They threw us under the bus (twice now), soleus (if they sold it was at a substantial loss), and Paul will have no loyalty for the next investor either.  And what is the point of laying off all those scientists if you're going to do this? The more I think about this the less sense it makes.

[SPCEO1]

Why do this deal now? We can only speculate but here are three guesses: 1.) The financial engineering required to produce the good results at the end of Q3 have started to reverse and they were likely to violate the $20 million cash buffer again. But why raise so much and dilute current shareholders by so much even if this was the case. 2.) The first TH-1902 patient has already seen some

[PWIB123]

These were the only reasons I could think of as well.  Not one single plausible possible explanation.  I sit here asking myself, are they really this stupid?  If not stupid, are they really this selfish?  I think they just used their last lifeline and will be too arrogant to salvage what's left.  The order of events that are transpiring don't make sense.  

[SPCEO1]

I was out of the office today so was not operating with all the info at my disposal. The dilution is a bit more than 50% and Quebec will now own a bit more than 25% of THTX, so the board is now protected from any shareholder recriminations for the disastrous share price performance over the last 5+ years. So, this seems to be the best explanation for the timing and size of this deal. 

[SPCEO1]

I have not had a chance to sort this all out yet but it sure seems complicated. It looks like Investment Quebec does not want to own more than 19.9% of the stock. Dilution could be more if Cantor can place the extra 15%. It will be interesting to see who the other buyers might be and if insiders are buying significant amounts. 

[PWIB123]

I still find this absolutely contrary to what has been portrayed by management and a terrible judgement to be frank.  No one should trust them, ever, no matter what they say.  I never saw a notice or heard anything about a 5:00 p.m. meeting with shareholders.  Where was that notice and why were some invited and not others?

[Trogarzon]

Well this is the result of total mismanagement and terribly bad financial decision since our dear Chair decided to put a Marketing VP in charge.  Someone who could'nt count and was surrounded by mediocre CFO and team.  As simple as that.

[SPCEO1]

I got an email from Cantor shortly after the deal was announced with the terms and the notification of the 5pm call. Basically, it likely only went to institutional investors.

[Trogarzon]

They want more at 1$ ... coming up.. all you can eat... 

[Trogarzon]

Ok because they can now buy a 20M market company... is that it....

[Trogarzon]

50% of the company @ 0.25$ after a pause @ 3$ less tha a year ago and 15$ 5 years ago.  To survive.

[Trogarzon]

So to summarize.. 12.5M to make US institutions happy (Soleus maybe) and 12.5M to keep their jobs.  Working capital....

[palinc2000]

I dont know what is the intended use of proceed.For sure a cure is needed to take the gun held by Marathon to THTX head ... from quarter to quarter The Marathon deal is caustic  

[SPCEO1]

They can't pay off the first $40 million until next August.

[juniper88]

Why renegotiate the terms with marathon again and again to just buy them out now??

[Trogarzon]

The way I look at it is that 67% of nothing is still nothing.  What is more difficult to digest is facing reality of this being the END.

[Trogarzon]

Not the END of Thera.. the END of our investment in Thera.  It now belongs to new ones and Investissement Quebec. We will never make it back, never.

[SPCEO1]

It would be too costly

[Trogarzon]

Can we try to block this and request a Strategic Review plan.  I would think a complete sale of the company would be preferable to this giveway. Soleus, You and your friends, Me and others.  This is the last time we can do anything about it. 

[palinc2000]

Where did the Company mention a maximum offering of 25 million$ and the issue price per dhare?  

[Trogarzon]

Next chapter tomorrow 9:30am.  Sleep tight don't let Thera bite.  

[Trogarzon]

What message are they sending.  They are in fact willing to sell 2/3 of the company for 25M usd...  they are in trouble.

[Trogarzon]

In the middle of tax loss season... it's desperate move by desperate company.

[Trogarzon]

Market is 1929ish in may respects.  Lots of coucou stuff happening to stocks...