Chilling called this one before Feuerstein
turmoil is caused by the management
By chillinginbarbados . Sep 27, 2012 10:57 AM . Permalink
when I said the financing deal in Aug was one of the worst, it wasn't just that we long term holders were getting a 30% haircut no matter what. It was also because of this type of stock trading that will keep EXEL a bad name to trade at least for the short term. If you were financing the offering you would participate in both the common share buying and the convertible at 5.5. Since the stock was a 4.25 you would short the share at anything above 4.25-to 5.5 and make money to pay for the convertible part of the deal. When EXEL hit 5.5, a predictable massive shorting began. When it hits near 4.25, buying will start again. This cycle will go on until the financiers will make money to pay for the financing. In the meantime retail investors will be burned and won't touch the stock for a while. On the sideline is the other shortshort action that will prey on the weak demand and the possibility of another shoe dropping, bad news, stupid management etc. Don't know how long it will take financiers to make money to pay for the financing but this yoyo won't go away until the stock will well above 5.5 with some real news. When you trade or invest in comp like EXEL that is in the pockets of GS and the ilks expect to be shafted.
You continue to underestimate the damage done by MM in the recent share offering. All trust is gone. The participants of the last offering are simply using any positive news as an opportunity to sell into strength. They want to take their easy money and get away from MM as fast as they can. Just wait until Cabo is approved for MTC, you will see some serious selling then. Short of a buyout offer or Comet trial victories, this stock is going nowhere. And, unfortunately, any buyout, no matter how sweet it would be for the shareholders, must be accomplished over the objection of MM. He will not give up the salary and prestige of being CEO of an awesome drug without a fight.
In as much as I may be underestimating MMM's megalomania, I don't think I am underestimating Cabo's potential. A couple years ago, I recognized the promise of MET inhibition in cancer therapy, and began investing accordingly.
To date, Cabo has displayed such an unprecedented level of overall benefit over such a broad range of cancers that it has become one of my favorites. I don't see yet that it has an equal amongst comparable METi class TKI's...
...and it's effect on bone mets puts it in a class by itself.
I'm not necessarily advising others to hold, I'm just suggesting that there are those that would bully you out of your shares by manipulating SP - which is precisely what I see taking place w/ EXEL.
In two years time, I expect MMM will have little to do w/ Cabo. He'll be history. His path to self-destruction will be his own hand-written obituary. CEO's come & go...but Cabo's data is building a legacy in MET -class inhibition therapy.
You are singing yesterday's tune.
From Saturday's PR:
"All 24 BRAFi-naïve patients evaluable for tumor responses had a decrease in tumor size from baseline, however, further follow-up is required to determine the confirmed objective response rate."
"Exelixis is entitled to an initial equal share of U.S. profits and losses, which will decrease as sales increase, and will share equally in the U.S. marketing and commercialization costs. "
"Roche has disclosed that it intends to evaluate the combination of vemurafenib with GDC-0973 versus vemurafenib in a multicenter, randomized, double-blind, placebo-controlled Phase III trial in previously untreated patients with BRAFV600 mutation positive, unresectable locally advanced or metastatic melanoma."
Sudden need for $200 million more in cash (e.g. the offering of which you complain.)
Notice also that the Roche combo study has been flying under the radar as it has been given almost no mention in the previous EXEL conference calls. Neither was it mentioned in the Adam Feurerstein short thesis article that came out before ASCO. Neither was it mentioned in the complaints about the offering on this board. Yet from how I look at things half the US rights for an effective drug against melanoma doubles the value of this company. The guy who seems to get it is Ernie on this board.
Warrants and this Convert offering are not the same.
If I buy a stock offering at say X with warrants to buy 1 share for every 2 of the offering at X + 70 cents, then I put out zero dollars for the warrants (the company just gives them to me to entice me to give them some cash they desperately need.) If then I short the shares at X + 2 bucks and the stock goes to X + 1 I cover and keep the warrants. If it goes to X+3 and I want out I buy the warrants and make 1.30 in profits. There was no way I could lose. This is a classic death spiral financing however it does not always lead to death. ARIA, for instance did almost exactly what I am describing above at 1.50ish (warrants at 2.10ish) and today is about $24. Viable drugs in big markets trump all else.
Converts don't work the same way. First. if I was the buyer, I paid money for them up front and they pay interest so are worth income which offsets any play that requires me to sell them to someone (this creates some risk for me whatever I do.) Second, the converts can not be converted to stock until 2019 (which means if I have to sell, I have to make a market with someone at some undetermined price, creating risk.) Third, their value is capped because EXEL can buy them back without converting them to stock. Fourth, if the company goes belly up the converts are not worth much (which is what you may be betting on if you go short.) Fifth, if I sell them out while EXEL is going up rapidly in price I have probably cost myself some $ relative to NPV of the converts. Because of these considerations, there is a good chance of making a fool of yourself by mindlessly shorting EXEL (with now two likely viable molecules.)
Sell to me my friends, for I am scaling in again after selling out at 5.35. This time I will be looking for a higher selling price than that and am "willing" to be an "investor" instead of trader (i.e. I may wait months instead of weeks to sell out, LOL)...
very good post, unfortunately for MM if this POS keeps trading the way it is, he soon will have no company to be CEO for....and I will also like to know where the hell is the BOD in all of this, don't they see all the bad decisions that the useless CEO has taken so far? They are not hurt by the damage that has been done to the stock price since the guy has been in command....?