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  • cholbech cholbech May 15, 2008 11:13 AM Flag

    ARTE Scenarios

    It would seem that the only 2 realistic options are 1.A second round of shares being sold. 2. Another private loan.

    The first option seems unlikely due to the current share price, the dilution would be huge. The second option would I imagine be dependant on their sales performance over the coming months. This makes this option highly unlikely also. To hit even their low estimate for the year they now have to generate about 3.5 million in sales for each of the next 3 qtrs. They have not even come close to this number in any qtr so far and it seems highly umlikely that they will suddenly perform to this degree for 3 qtrs in a row. I suppose a massive reverse split to reduce the number of shares outstanding and then a second placement of shares to raise more money seems the most likely option, so lets call that option #3. The reality is that they simply cannot seem to generate any meaningful sales volume despite a steady increase in Physicians trained.

    I also wonder why they are conducting these studies to show that the product is safe and superior to its competition. Is it because they are getting feedback from the Physicians that the Users are nervous about using it or is it because the FDA has told them that they must conduct these studies to provide data that would persuade the FDA to allow them to remove the skin test?

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    • cityontheedgeofforever84 cityontheedgeofforever84 May 15, 2008 8:35 PM Flag

      Thanks for all the thoughts. What I find interesting is the stock action since the Q1 call. It seems to run counter to many of these scenarios.

      • 1 Reply to cityontheedgeofforever84
      • So i think the big question is do they get bought out before they go bankrupt?

        If you were a competetor interested in the product would you wait for them to file bankruptcy or buy them now?

        The reasons to buy now are 1)There maybe a desire to keep some parts of the team together. Waiting until bankruptcy you risk loosing key people. 2) If you wait until bankruptcy you may need approval of the court to buy what you want so by the time you get that approval you may have lost key people or may need to requalify manufacturing etc

        The reason to wait until bankruptcy is that you get it at a dirt cheap price.

        I think overall there is a good argument for a buyout. First if you buy now you keep the key team members you need. Second it makes financial sense. If arte's expenses are out of whack part of that is the salesforce. So if you whack the entire sales and marketing operation you save a lot of money. You use your own sales force that is already talking to all the same doctors and your own marketing and salesforce is actually a successful one so you get something for it.

        The big issue is how do you market it. If you sell Botox and you buy artes can you sell both? Can you successfully market the artes only to the botox dropouts without killing your botox business? Yes you can because artes is only for a limited number of uses.

        We'll see but the conclusion is if they go to bankruptcy and they shut down that manufacturing i think that will be a big loss. I also think that the temporary filler guys are watching the pipeline for other non-resobables. So they may need to compete with this category even when artes fails.

        Even if they buy now at $4 it's a bargain for a company that knows what they are doing and for any remaining shareholders at least you get back some of your losses. Take the bird in the hand.

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