GSK says.."We like what we have with HGSI"--- simple translation - "we like HGSI getting bombed out...it suits us quite well. Let's bring HGSI on its knees before we buy it on the cheap"
I think Watkins is sleeping with GSK. GSK is the enemy of HGSI shareholder, not a partner. They are partner with Watkins and have planted a GSK man on the board to keep a close eye on Watkins. Watkins has sold out HGSI shareholders.
With current burn rate, HGSI will run out of cash in 4 Qtrs. The only sensible thing to do now is to use the cash to pay off debt and sell HGSI to the highest bidder. Buyer gets a debt free HGSI, $600 tax loss credit, assets and pipleline worth $700 million and places a $2.5 to $3 billion price tag in Benlysta for total offer of $4 billion. With lowered peak Benlysta sales of $1.5 billion worlwide (needs less than 40,000 patients worldwide), buyer like AMGN or J&J can recoup $3 billion in 5 years with low overheads with their competent sales force. Rest will be profit. Makes sense to give the middle finger to GSK and stimulate American big pharma to make the move. Why is Watkins not facilitating this to build shareholder value? Has he sold us out to GSK?
Let's grill him at the next shareholder meeting.
Sales are tracking the S-curve model, and HGSI has missed the low end of the target by only a bit in its first 2 Quarters of sales. However, price drop has been over 60% in 7 months.
Bottom line, it's oversold. Heavy shorting is a sign of loss of trust and communicates to HGSI management at least 2 vital points;
1. Get your act together and beat the sales targets predicted by 5%,15%, 30%, 50% model.
Based on first QTR sales of $7.8M, and second Qtr sales of $18.8M, 30% now means $38 million and 50% now means $60M. Better beat $38 million next QTr and $60 million in following Qtr.
2. If you keep missing low end of revised target, better pay off debt with rest of cash left and sell the company to highest bidder between $24-$27 range. Let the experts do the selling at reduced overhead costs with tehir massive sales force structure.
Heavy shorting also means as HGSI achieves the desired metrics outlined above, the correction to 20's will be spring loaded and swift.
So instead of $22 million, they sell $19 million...and all hell breaks lose?
Assuming they sold $22 million, what would have happened?
Shorts are overdoing the shorting.....longs are losing faith in management....this is precisely what Goldman Sachs and GSK likes to see....they win by buying it cheaper...lot cheaper......like at $3.7 to 4billion instead of $4.5 to 5billion.