New to board. ONTY has been on my watchlist since 12/19/12 (the big drop). I have no position yet. Alright, enough disclosure. This board is far better than most of the ones I monitor. Congrats on that. Here is what I'd like to ask:
Now that the 90 million and royalties in the mid-teens is off the table for ONTY from Merck, what would new terms set by Merck look like going forward? I think it might be a lower offer since Merck could use Wednesday's missed target results as leverage for a lower deal (although like many here, I believe the results were good). I firmly believe Merck will proceed with trials despite high costs. It would be insane to let the drug die considering it adds almost a year to patients lives. That's a lot of loose ends one could tie up before they pass and if I was ever in their shoes, that extra time would be invaluable. That plus all of the money already put into this drug and Merck stating in a phone interview yesterday stating they were pleased with the results. Anyways, any estimates out there on what a new proposition from Merck would look like?
I think the picture is more nuanced than that Deftone. Merck has the drug moving forward in a phase III in Asia as well as several other indications. I think the consensus is that Merck will wait for Asia trial results to see if the mimic what happened with the failed START trial and base their decision on that. If it's a flop, they will simply hand the drug back. I'm not sure about the terms of the agreement but if Merck continues to develop, they only have to pay ONTY if they apply for approval and then again when they get approval, and then again when they start selling the drug. So essentially, Merck can sit on it and wait without having to send money to ONTY anyways. That's the problem for ONTY. ONTY doesn't have enough cash to move it's only potentially viable drug along (ONT-10) so I think the consensus is that there will be some dilution. Really the question is when to dilute, not if. I already put my money in on the drop so I am under water at the moment. If I had it to do over again, I'd wait until AFTER ONTY raises more money and buy on the drop in share price. But again, do your own diligence on this stuff. I lost money on the failure back in December and I lost money on this abstract because I was impatient.
Excellent reply solder. An example of why this board is superior over many others. Thank you for the insight, especially how Merck can, in effect, wait ONTY out. That's a problem I didn't consider. I'll look at ONTY's cash burn rate to determine when a possible dilution would have to occur versus the expected end date the Asia trial results. When is it suppose to end anyways?