Regarding cash positions, partnerships, and possibility of further dilutive offerings.
With the recent warrant announcement, I thought I'd add some more thoughts of mine.
According to their investor presentation updating in April, the company finished 2012 with $13.4M in cash with a monthly burn rate if $850k in 2012. I'll estimate an increase in burn rate for 2013 to $1M monthly to accommodate for the trial beginning, increase in salaries, etc. That means the $13.4M gets them into about Feb 2014, about what they're guiding (into Q1 2014).
The warrant calls will generate another $15M for the company.Estimating an increase to $1.5M monthly burn to accommodate for commercialization prep activity, further clinical trials, that should get them through 10 months, or roughly the end of 2014.
If trials go well, revenue generation for the scaffold may begin Q1 2015 so some additional cash may be needed to reach that point. I'll repeat what's already been stated here, but two options exist, an offering or partnership. My guess again, is a partnership on one or two of the hydrogel products late this year or early 2014.
Nice post. I doubt the warrant call will generate $15 million, so your projections there may be a bit rosy. I do agree with your thoughts on a partnership - that seems inevitable. Additionally, I doubt we will see any dilution until after we are listed on a major exchange. It would be foolish to sell shares at this price, when we can expect a double with listing.
As for the start of trials, I am hesitant to speculate on the effect the start will have on the stock price. If listing comes first, and it should, the stock should be marginable and shorts love clinical trials - could be quite the battle between longs and shorts. I would guess longs would overwhelm shorts, but I am not sure by how much.
The one glaring (insurmountable) problem for shorts will be the fact that our clinical trial is almost certain to succeed. That is, all Invivo has to show is probable benefit with no adverse reaction - seems a given to me. Further, with the trials being open-label, we should be getting good news month after month after month, all of which should drive the price higher and kill any short activity.
That said, it would seem foolish for the company to dilute shares for pennies in the near term, when they could be getting tons of money next year. And, as you said, partnerships and eventual market success could bring all the money they need. It could mean no dilution - ever! How rosy is that?
Thanks for the response. Could you elaborate a little more on why the $15M might be too high? That's essentially the strike price sum of all the warrants that were called. The only thing I can think of is some of warrant holders choose not to convert their warrants, which I would think to be surprising since they could immediately sell for 2.1X-3X their strike price. If they aren't converted, then they lose those warrants entirely.