Recently MEI Pharma, a cash strapped oncology company which had been dead in the water since about June 1 (ironic huh), raised $27.5 million in a private placement. The stock had been trading in the high $0.30s prior to this announcement on November 5. Today it trades at over $1.50.
Now, the interesting thing about MEI is that the private placement was severely dilutive. Here is an excerpt from the PR, "MEI Pharma has entered into a securities purchase agreement with the investors pursuant to which the Company will sell units consisting of an aggregate of 55,000,000 shares of its common stock and warrants to purchase up to 38,500,000 additional shares of common stock."
With an original market cap of just under $8 million (they had 21.6 million shares outstanding prior), their new fully diluted market cap at today's price is a staggering $172 million. That is a 20 fold increase in market value for a company that had consistently been an under-performer. Further, their current pipeline only has two Phase I trials currently being run. Anyone getting a sense of DeJa Vu?
If we look at Marina, we have a market cap of just about 6 million with an exhaustive amount of IP and out-licensed tech. We also have two clinical programs we can develop ourselves or out-license - FAP and bladder cancer. A merger would be much less dilutive than what MEI did and would allow us to use economies of scale to cut costs and push our programs (and merger company) into clinical development. If MEI can go up nearly four-fold on 500% dilution, imagine French being able to restore shareholder value with around 50% dilution via a merger. I rest my case.
Your thumb nail sketch is an OK deal but it just can't make me as warm and fussy as something like this would give some wood to the situational drama at hand:
They signed a deal with the devil:
Monsanto Company (MON) and Alnylam Pharmaceuticals (ALNY) have formed a strategic alliance to advance biological technologies in the field of agriculture. The new alliance brings Alnylam’s broad RNAi-based intellectual property (IP) and proprietary technologies to Monsanto’s new BioDirect™ technology, which aims to deliver innovative biological solutions for farmers. Under the terms of the agreement, Monsanto receives worldwide, exclusive rights to use Alnylam’s platform technology and IP in the field of agriculture, including the ability to grant sublicenses. Monsanto will pay Alnylam $29.2 million in upfront payments. In addition, Alnylam is eligible to receive milestone payments and additional funding for collaborative research efforts. Further, Alnylam is eligible to receive royalty payments on products utilizing Alnylam technology and IP. Moreover, Monsanto becomes Alnylam’s strategic partner in agriculture for a 10-year period.
This was taken from the ALYN message board on yahaa. It sounded to me like the similar deal for the same type of IP for the same BioDirect technology project that MRNA has with MON, however, with the $29.2m up front payment it would seem like we came up short somehow.
Moreover, if the IPs are somehow bent and blended or otherwise joined at the hip together how will MRNA be sure they aren't the one with the winning IP footing the payments for ALNY, proprietary IP could be very hard to attribute and prove in this tiny little RNAi-based world they are toying with, am I wrong some where?
The story I had referred to in my previous post was from the Tompson/Reuters also on Yahoo. Sorry about posting a link but I have trouble enough posting this comment.
Chew this over for a while and let me know what you and your friends have to say.