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MELA Sciences, Inc. Message Board

  • z_for_three z_for_three Jun 29, 2010 10:26 PM Flag

    Why isn't Secondary Offering AFTER FDA decision?

    Let's say you are MELA's management and you know the FDA is going to decide on August 26th whether Melafind gets approval. If approved, you know the stock could double in a day. You know everyone will want ownership in such a huge market opportunity. You know a Secondary Offering will command strong demand and generate significant dollars to fund the product's commercialization.

    Then why the HECK are you offering shares NOW in a terrible market???

    You know why? Because you read the Barron's article and you've seen your stock rise in the past few weeks and maybe YOU ARE JUST NOT THAT CONFIDENT with your product!

    I'm selling at the open. I don't trust a management team who does this.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • http://www.gurufocus.com/InsiderBuy.php?symbol1=mela&Submit=Search+Insider+Trades

      No insiders have sold yet. Unlike SOMX insiders sold before dilution. Good sign. Plus insiders bought on June 10 2010.

    • The press release dow not say how many shares are being offered and the breakdown between new and existing shares. Anyone know the amounts?

      • 2 Replies to defpotecworks
      • >> The press release dow not say how many shares are being offered and the breakdown between new and existing shares. Anyone know the amounts? <<


        The SEC filing (Form 424B5) did not specify the number of shares on the cover, but if you dig through it, they provide an estimated dilution to existing shareholders based upon the issuance of 2.2 million shares (at $8.86 which was the closing price on Monday). This is a little less than 10% of the total outstanding shares (23 million at 3/31/10). All shares would be new shares. No shares are being sold by insiders.

        The bottom line is these shares are being purchased by large institutions and I highly doubt they'd be putting up $17-$18 million based upon an expected rejection by the FDA. My guess is management DOES expect approval and anticipates a significant capital need to roll this out and did not want to be hamstrung by poor market conditions should the market really freefall this summer thanks to a possible global slowdown. Issuing about 10% new shares to ensure you had adequate capital, even if the stock price isn't optimal, seems like a pretty good move. This should give them roughly $40 million by the time the August panel meeting rolls around.

    • why should they wait? smart management will use the money now to start making arrangements to make money once approved.this shows a positive sign that company is confident.

    • Let's say you are MELA's management and you know the FDA is going to decide on August 26th whether Melafind gets approval. If approved, you know the stock could double in a day. You know everyone will want ownership in such a huge market opportunity. You know a Secondary Offering will command strong demand and generate significant dollars to fund the product's commercialization.

      Then why the HECK are you offering shares NOW in a terrible market???

      You know why? Because you read the Barron's article and you've seen your stock rise in the past few weeks and maybe YOU ARE JUST NOT THAT CONFIDENT with your product!

      I'm selling at the open. I don't trust a management team who does this. -- z

      **********************************


      Dont come back later and say that I didnt warn you.

      Remember when we warned Barron about the faulty business plan of CRA? The stock was around $250/share and I literally begged the guy to take his profit of a one year, half million dollars. he ignored me and lost virtually everything over night.

      I recall warning the HDH during dinner one evening about her blind faith and dedication to the teachings on what I called her "real estate investment cult". I begged her to stop leveraging her home and everything else she owned to purchase more and more real property during a mature real estate bubble. My ex wife remined me that the HDH curtly remarked to me; "dont worry yourself about it". She recently filed BK and only remains in her home because of my good graces by not forclosing on it in order to pay off her loan to me.

      I could go on and on with such examples. Suffice it to say; I warned you.

    • I agree with the concern cited in your message. Why, in heaven's name do you need to issue shares at all? If there is an approval by the FDA, why not have a line of credit facility lined up with a bank, instead of diluting shareholder interests? Too simplistic,IMHO
      Pax

 
MELA
2.25+0.05(+2.27%)Aug 26 4:00 PMEDT

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