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PharmAthene, Inc. Message Board

  • ddales9498 ddales9498 Oct 10, 2013 6:58 PM Flag

    So Prescott does not like the proposed merger with Theraclone?

    From the 13D:
    The reason for conducting the business at the Special Meeting as set forth in proposals (1) and (2) above is because the undersigned believe that the current members of the Board are not acting in the best interest of shareholders. Prescott is concerned that the Board has not adequately assessed the diminution in value of the Company which may result from the Company’s proposed merger transaction with Theraclone Sciences, Inc. (“Theraclone”).

    So we know that PIP bought Theraclone (and not the other way around) and infer that Prescott is worried that this purchase is not in the best interest of shareholders wrt the pending SIGA outcome; but they go on to say that the Theraclone merger will positively impact Net Operating Loss (which means PIP will not lose as much money, and that is good, but will increase the tax burden).

    So I am confused ... is the Theraclone deal a good one? Obviously Prescott is calling this meeting to get more facts and possibly impact the decision to merge with them.

    All in all - PIP is undervalued ($89 M company that stands to win $400M - $1B); but not sure if they would go higher without Theraclone - I assume Prescott thinks PIP would go higher without Theraclone.

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    • Thanks Tee!
      I saw your response yesterday (merger of equals, your calculated price target, insiders who bought - for a reason ...), but for some reason the Yahoo MB is not showing it today. Love hearing your insights! I think I will sell at $4 on a spike if / when it gets there. If it retraces again, may pick up more and wait to $8.

      Thanks again!

      • 1 Reply to ddales9498
      • My advice is don't sell more than what recovers your invested capital on any such spike (nothing magical about 4 either - 3 will do, especially if you're running the Texas Hedge as well), and be ready to park a ridiculous low-ball with the proceeds. Prescott is right to think that the PIP BOD rushed into this deal, but would be jumping to conclusions to presume they were just dancing to MPM's tune. Simply calling a meeting indicates no such jump IMO. The way I see it, Theraclone gets absurdly undervalued stock rather than IPO cash, and PIP gets a clearer, less government-dependent future after the SIGA haul has been booked. Strategically, it's a no-brainer. But quibbling about price is what fiduciaries do, and Prescott has an obvious fiduciary duty to their SmCap fund's shareholders; likewise, the PIP BOD has the same duty to all PIP longs, and Prescott would press them to more fully demonstrate their good faith, wisdom and prudence prior to the shareholder vote. As ruffled feathers go, this is pretty tame compared to the antics in the DE Chancery Court. We won that one, but shorts have had their thumbs on the scale ever since - they are the real enemy, and their capitulation the real prize. And I still think the "Wall Street lights risky hair on fire, on Boehner's say-so on Stephanopoulos" was the real reason for the letter/meeting call - no one likes to see their 2.15 blocks NAV to 1.85, no matter how idiotic the reason.

        Sentiment: Strong Buy

    • Quibbles: "not the other way around"...IMO, nope, it's a "merger of equals", which puts the Theraclone CEO Stocks as CEO of the new PIP. Remember that Prescott bought about 50K shares AFTER the merger proposal, most of it after the S-4. Now they may have made the last push to get to 10% to have standing to do what they are doing now (calling a meeting). But mostly, I think they #1) want to play the role of outside fiduciary / activist investor, citing the ownership stake of MPM (single largest PIP shareholder) in both companies and generally holding the BOD's feet to the fire, and #2) prompt an investor discussion that may make shorts realize that they should have covered in the low buck zone. I still like the Theraclone move - that's a solid pipeline they have there, and though PIP's BARDA contacts help it along considerably, Theraclone's expertise (and fresh set of experienced eyes) could well move PIPs biodefense pipeline from promise to money-making reality as well. But I've said it before - my own valuation went from an $8-playing-hard-to-get to a $4-the-very-minute-shorty-can-no-longer-fight-the-tape. Kinda depends on what you like - if PIP ever went to $8 without the Theraclone pipeline, the sell-off would be harsh. I can see new PIP holding $4 without much trouble, and having fabulous squeeze potential on the doubled chance of good news.

      Sentiment: Strong Buy

    • After re-reading, Prescott is saying that the board "rushed" to buy Theraclone and did not consider NOL as assets (so they probably should have paid less for Theraclone I suppose).

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