Does anyone know what the effect of doubling the number of shares plus 10% will have on the stock. They voted to change the number of shares from 50million to 110 million. This seems to be a large dilution.
link to their website: http://www.neurocrine.com/html/inv_annualMeeting.htm
they are not issuing any shares
at the time they asked to increase the # of shares outstanding NBIX was trading around 70$ a share and there were 37 million shares outstanding and only 50 million shares authorized - so they bump it up to 110 million in order to allow for a stock split and then maybe the purchase of a company or other shares allowable under a poison pill
they don't need to raise any money for a long time - and by then they may have a stock price that is 10X the value it is
but they have no debt , 265 million in cash, they could do a sales leaseback of their property and facilities for prob another 100 mill , and get 200 million from GSK in milestone payments
and one more thing - indiplon IR being sold only by NBIX can become cash flow positive very quickly
>>>I don't follow. Can you explain. How is this not a dilution?
Sorry - I know that you are an intelligent person. However you twice in a row refered to things that document or I supoosedly said - which we didn't!
Please read the thread again.
its obvious that at some point they will go to the street for funding. Its going to cost money to get a product for their sales force to sell. Biotechs always maintain or at least try to maintain 2 years of cash, at NBIX current burn rate they have a little more than 2 years of free cash.
Just part of Biotech investing they need to fund the business as part of their overall business strategy and keeping that sales force intact is smart as it is a valuable asset, But at this price $10 it will be serious dilution for current investors, at least 10M shares need as its going to cost $150M to $200M or more to do a deal for a marketed drug that can generate positive off-setting sales force expenses. They need to do a deal by September or sooner and no short term catalyst to push stock price higher.
The authorization doesn't have any impact, it just allows the Board to issue or reserve shares up to the new limit. There will be no dillution until the shares are effectively issued and in that case the company will also reap the cash from those shares.