Raising Capital Part 1

Biota's recently announced capital raising/new share issue has been anticipated for some time. Management's entire rationale for this issue has been made clear -  is about increasing stock liquidity; it concedes it doesn't need the money. Indeed, the first observation about the amount raised is that it still won't buy all that much. Hunter Hall's sell down has done something for liquidity. But there are a lot of Australian holders, me included, who stubbornly hang on and don't buy, sell or otherwise trade. Australian holders... and East Hill.

Here are some thoughts:

1. This share issue just about completes the set of completely ridiculous (disclosed) actions made by the company as part of its Australian departure. Their effort was just amateurish. Worse could be said, but I am being polite. The definitive statements made in public about not needing to raise capital are ringing in my ears.

The use of NABI as a listing vehicle was a mistake. Even if NABI shareholders didn't fight the deal, all BOTA would have had is extra cash but not the extra shareholders, and by the logic of this issue, no more liquidity than it has now.

An IPO would have been the best way to enter NASDAQ.

2. The timing and price of the issue is doing Wall Street a favour. The price is at its near lows, and no significant corporate or research action has yet occurred. So, they have gone to the Street with a powerful value proposition at the expense of the rest of us. I guess the argument is that the favour will be returned.

3. The dilution, in terms of shares issued, could have been worse, so I'm thankful for that.

4. The issue closes in about a week which hopefully means they have their buyers lined up.

5. They have done a vastly better job at supporting the company in the market and protecting it from a shorting attack than the previous Board on its announcement of the original deal on the ASX. Some pumping in the last week, and some significant support through the day of the announcement.

6. I emailed Guggenheim and have asked for an allocation - let's see what they tell me!

Other interesting issues from the associated presentation (SEC filing dates 9 Jan), which is a good update, include

1. IGLOO is already 30% recruited: that augers well. The first few patients at each centre are the hardest to get - the rest then tend to follow more smoothly. Also, centres can be shut down over Christmas. I expect they will complete recruitment as planned. The current influenza season is severe enough. In some odd way, a polar vortex is unhelpful - people might get the flu but they need to go to their doctor/medical centre and enrol in a trial which you might not be bothered to do if you're freezing cold, even if you have a 50% chance of getting free Inavir.

2. Vapendavir seems to have been resurrected as a respiratory drug! I only hope someone is interested in making a deal. I hope BOTA don't plan on pursuing it alone. Really, don't.

3. RSV is powering along with 2 new candidates and some good preclinical data.

What don't we, or the market, have?

An update on the ROW agreement with Daiichi Sankyo.