Many people tell me the Japanese do business differently. Often those same people can't exactly explain why they do things the way they do, other than culture.
I can't explain why DS wouldn't have bought out Biota by now.
DS co-own LANI. They completed the clinical trials to registration and then marketed it themselves in Japan. It makes them money: maybe not a fortune, but a good revenue stream. They know the margins.
Interest rates are zero and the yen is flowing freely from the printing presses.
DS have a presence in the United States.
Biota currently holds the financial capacity to complete clinical trials in the US, and is looking to market it themselves. Biota will be coming to DS to settle a royalty deal.
And Biota have an enterprise value of about 50 million. 50. Maybe 2 bucks a share.
Why wouldn't DS buy Biota and get on with marketing the compound themselves in the US?
Why would they settle on a 10% royalty? Why would they agree to any royalty deal when for a relatively miniscule amount they get a funded and established clinical trial program for a drug they know well, a manufacturing agreement for compound and device, and a revenue stream in 3 years? They must know the company still has little profile in the market and the Aussie investors will probably take a cheque if it's reasonable.
This is a compelling business case.
At 10 per share it would cost them barely 300 million.
At 10 per share, they get 70 million in cash and the balance of 230 million grant (with a 7% administration margin). And at 10 they could claim they are paying over 100% premium to market.
And most importantly, I don't know if there would be any other buyers in the market, so no auction.
For us, 10 per share is still less than the amount the ASX listed Biota reached on the day it announced it had won the BARDA grant for LANI. Those long toothed Biota holders wouldn't see it as a win.
But that's not my point here - my point is about DS.
Tuesday 27 August 2013
Saturday 17 August 2013
More Board changes
Dr Errington has resigned from the BOTA Board.
He's been replaced by a local (to Georgia) medical venture capitalist, Dr. John Richard, who's been nominated as independent.
The Board changes are interesting, but opaque to outsiders. It might have been reasonable to presume that Dr. Errington was East Hill's representative on the Board. Why East Hill would let that position lapse hard to understand, given their ongoing stake.
It's a little hard to see how a seed venture capital company will help with Biota's "liquidity" problems, but this will be revealed soon enough.
Many of you have already mentioned to me privately, and at the Melbourne shareholders' update, that the best option for improving liquidity is to create a healthy demand for the stock. In that case, more buyers from the US and more sellers (some from Australia) will meet each other.
The AGM will be in November, but the release date of the 2013 results is not yet clear.
He's been replaced by a local (to Georgia) medical venture capitalist, Dr. John Richard, who's been nominated as independent.
The Board changes are interesting, but opaque to outsiders. It might have been reasonable to presume that Dr. Errington was East Hill's representative on the Board. Why East Hill would let that position lapse hard to understand, given their ongoing stake.
It's a little hard to see how a seed venture capital company will help with Biota's "liquidity" problems, but this will be revealed soon enough.
Many of you have already mentioned to me privately, and at the Melbourne shareholders' update, that the best option for improving liquidity is to create a healthy demand for the stock. In that case, more buyers from the US and more sellers (some from Australia) will meet each other.
The AGM will be in November, but the release date of the 2013 results is not yet clear.
Thursday 15 August 2013
Liquidity solution: capital raising.
In the end, not very imaginative.
The promised solution to BOTAs liquidity problem is to issue up to 75 million dollars worth of new shares (or warrants, or any other form of security).
At today's prices that's nearly 19 million new shares. Pretty big chunk.
The release to Nasdaq late yesterday outlines the company's plans. All that remains is how much, to whom, and at what price.
The invitation to share in BOTAs future growth, should it ever arrive, is never ending. If BOTA is true to form, the terms struck with the institutions will be to the disadvantage of current and small holders. It only remains to be seen how low the price will be.
Again, you will be able to judge the performance of the current independent non-executive Board members based on this deal. But remember that they don't face a vote.
The most abrasive part of this is that of all the reassurances delivered during the process of moving to Nasdaq, the loudest was that BOTA would be cashed up, and wouldn't need to capital raise. This dilution comes to a still pre-reconstruction battered share price.
Carpetbaggers will return to Georgia.
The promised solution to BOTAs liquidity problem is to issue up to 75 million dollars worth of new shares (or warrants, or any other form of security).
At today's prices that's nearly 19 million new shares. Pretty big chunk.
The release to Nasdaq late yesterday outlines the company's plans. All that remains is how much, to whom, and at what price.
The invitation to share in BOTAs future growth, should it ever arrive, is never ending. If BOTA is true to form, the terms struck with the institutions will be to the disadvantage of current and small holders. It only remains to be seen how low the price will be.
Again, you will be able to judge the performance of the current independent non-executive Board members based on this deal. But remember that they don't face a vote.
The most abrasive part of this is that of all the reassurances delivered during the process of moving to Nasdaq, the loudest was that BOTA would be cashed up, and wouldn't need to capital raise. This dilution comes to a still pre-reconstruction battered share price.
Carpetbaggers will return to Georgia.
Thursday 8 August 2013
Trius
When I was at the 2012 ICAAC in San Francisco last year, Trius Pharmaceuticals had extensive presentations on their two antibiotics.
The main interest for me was that they had a Gyrase program, similar to Biota's, and they were working very hard on it based on the presentation posters. I couldn't find another gyrase program presented.
Well, Trius looks like it will be sold to Cubist for at least 13.50 a share valuing the company at about 600 million. Which is about 4 times what it was worth a year ago when I was looking at their posters. It has about the same cash in the bank as BOTA, but is spending a lot more on its clinical Phase trials. Their gyrase is in Phase 1.
Their main antibiotic is tedizolid, which is a gram positive antibiotic with MRSA coverage. Its completed some Phase 3 trials in skin infections and they are extending its clinical scope.
I think the BOTA gyrase program might be worth something.
While a swallow doesn't make it spring, there have been a couple of them in the uplift in the share price of late.
The main interest for me was that they had a Gyrase program, similar to Biota's, and they were working very hard on it based on the presentation posters. I couldn't find another gyrase program presented.
Well, Trius looks like it will be sold to Cubist for at least 13.50 a share valuing the company at about 600 million. Which is about 4 times what it was worth a year ago when I was looking at their posters. It has about the same cash in the bank as BOTA, but is spending a lot more on its clinical Phase trials. Their gyrase is in Phase 1.
Their main antibiotic is tedizolid, which is a gram positive antibiotic with MRSA coverage. Its completed some Phase 3 trials in skin infections and they are extending its clinical scope.
I think the BOTA gyrase program might be worth something.
While a swallow doesn't make it spring, there have been a couple of them in the uplift in the share price of late.
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