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BioMimetic Therapeutics Inc. Message Board

  • alternatepatel alternatepatel Jan 25, 2013 6:54 PM Flag

    Help please..

    i m thinking of getting in at this level (8.15$ / share), as i understand from the press release- each BMTI share will be converted to 0.2482 shares of WMGI (0.2482 X 21.13 = ~5.244$ ) + 1.5 $ cash on the closing of the transaction in 1Q 2013.

    so the upfront will be = ~5.244 + 1.5 = 6.744 $
    (value will change daily with WMGI's day to day pps)

    after the closing of transaction Contingent Value Rights (CVR) of BMTI will be listed on Nasdaq which will start trading at previous day closing of BMTI (say 8.3$) minus the upfront payment= 8.3-6.744= 1.556$

    If Augment is approved, Wright medical will pay 3.5$ in cash for each CVR and more upon achieving sales milestones...

    Is my understanding correct? Am i missing something?
    When should i get in? before conversion to CVR or after?

    Risk/benefit with getting in before CVR: upfront will be largely dependant on WMGI's stock price on that day

    Risk/Benefit with getting in after conversion to CVR: price will be totally dependant on FDA approval for short term (3months-1 year)

    So, when should i get in? and what could be the logically estimated approval time?
    thoughts much appreciated

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    • You have it mostly right except no one knows what the CVR's will be trading at at this point. The premium in the price of BMTI does not mean the CVR will start trading at the $8.3 minus the $6.744 as you cite. At least as far as I understand it. It is a good indication that there will be interest in the CVR's but the trading symbol and how it trades will have no bearing on what BMTI's final share price is prior as I see it. IF the CVR trades at $1.55 before any FDA milestone payment it would be a steal as its an easy 100% gain within 12 months and most likely sooner. If the market is inefficient enough to miss-price that badly a lot of us will make a lot more money! Also, the CVR spreads may be high (i.e. bid $3.50 and ask $4.15) so it may not be too liquid of a market. I have never traded CVR's before so it will be interesting to watch. There may be more information on it in the S4/A if you want to read through it or you may even want to call the company next week to share some insight.

      Advice should not be taken seriously based on these message boards but in general if you are playing for the CRV's you may want to accumulate some of the stock now so you don't get caught with high spreads or too little liquidity when you go to buy the CVR's (If you have a CVR plan on holding it a while IMO). If you knew they would be trading at $1.50-$2.00 pre FDA approval I would say wait and buy only the CVR's but its anyone's guess what they will trade at. For all we know WMGI may decide to buy up a lot of the CRV's over time to lessen their eventual cost of the purchase? They already own over a million shares of BMTI as it is so will have a lot of CVR to start.

      • 1 Reply to uniowner
      • thanks for the reply
        If WMGI can buy a lot of CVRs prior to approval, they will end up paying less to the shareholders, but i doubt whether SEC allows it.

        In last release on 7th jan 2013, BMTI said they will respond to rest of the FDA's request within 'two to three'' weeks. So i think they have responded back by now.

        Though the company is guiding for an approval between Apr. 2013 to Jan 2014, i feel it should come somewhere in March 2013.

        FDA recently have made several decisions earlier than the goal date, and moreover, they haven't yet asked any additional clinical trials till as it was feared after the advisory panel meeting in 2011, so almost after 1.5 years, FDA has asked for no more studies and requested ''informal'' clarification requests, so i feel approval its a done deal now.

        Even if i buy now, i will get ~`6.5$ cash/share when the transaction closes (i belive it closes on 31 march- as management have guided in 1Q 2013) plus i will be holding a CVR worth ~1.5-2.0$ (estimated from current price)