Here is what I now understand about the preferred matter
I got the following understanding from an intensive perusal of the most recent 10Q. Please check the 10Q for yourself.
Tang Capital and a company called RTW are the sole holders of the preferred. They were granted a total of 9500 preferred shares pursuant to the spinoff from Galena. The preferreds were created for Tamg and RTW. Each preferred share is convertible into 2437 shares of common. The total common shares that underlaid the grant to Tang and RTW was 23,151,500.
Tang and/or RTW can only convert, initially, about 450 preferreds each [I assume, but don't know for sure, that Tang and RTW are separate entities.] That is because, otherwise, they would exceed the 10%-holder limit. Since they have 9500 shares in total, they would have to sell the 1,100,000+ common shares each times they convert in order to convert more. That is, they must keep selling the common they get in the conversions in order to obtain the value in the remaining preferreds they hold.
Conclusion: There is one heck of a big overhang that must be sold--and one heck of a big dilution coming our way.
I hope I am wrong and I might be. Please do your own due diligence and report here if you think I am wrong.
The conversion is a good sign. Tang is getting common shares in anticipation of RXI being upgraded to the Nasdaq. It is important that a company (RXI) trading on a major exchange (NASDAQ) has a large enough float to support the market. If mutual funds want to invest in RXI the preferred share holders are going to have to convert shares. It will be a win win for all invested both the current preferred share holders and for the current common share holders.
Helpme_hanna understand why you are acting like this is a new revelation for you. On several previous occasions in your post history, YOU clearly point out the preferred shares and RXI's true market float of 34 million shares. It seems to me you that you are raising alarm bells for the sake of raising alarm bells. I think it is good to provide good information for new members to the board/investors, but stop the DRAMA! I invested in the company fully knowing the potential float (i.e., 34 million shares). This company is still undervalued when taking into account the full 34 million shares. Pfizer acquired excaliard (sp) for a market cap of $175 million with one product in phase 2 and no pipeline. RXI has received the patent for their technology and has a clinical pipeline, as well as, RX109.
Thanks Hannah. What I don't understand is why people would down vote something that is true. I don't care if you are a bull on this stock but you are no better than a basher if you downvote something based solely on you not liking what they are saying. Yes we will most likely eventually get diluted down to 30 million shares. This is how early stage bio tech works. Yes our fully diluted market cap is most likely in the range of 120 million not 60 million, just as Geert said in that video someone posted. Yes this is all the truth. Deal with it, accept it and either move on or stay put.
Well, Tang and RTW were granted 9500 convertible shares. Each convertible share is convertible into 2437 common shares. That is taken directly from the 10Q and is open for all to see. The 10Q is accessed via the RXI Pharma website.
The only way I can see (given the 10%-holder rule) for Tang and RTW to unlock the value in the preferreds they were granted is to convert to 10%, sell the common so that their common holdings are again zero or at least well below 10% of the total common outstanding, and then do it again. And again and again. How else could they obtain the value in their preferreds?
What would be nonsense, in my opinion, is for Tang and RTW to accept 9500 shares of preferred in payment of an obligation and then be unable to fully benefit from those preferreds.
Presumably Tang and RTW did not just fall off the turnip truck. They are sane, intelligent, people.
Tell me how else to understand the material in the 10Q.