I can clearly relate to your skepticism regarding ALQA as I had been a long time critic.
However, last week I went long 500,000 shares (400K@ .071/share and 100K@ .082/share.
So what was my thinking, and in particular, addressing the number of shares outstanding.
I went long because I know the activities of Phil Frost; I am impressed with the activities of new management
as well as their financial stake in the outcome of the company. Lastly, I considered that here is a company that does about 2 million of sales annually. I am speculating that if they are able to achieve even modest success in the wound care area of say 200 million annually or better yet they are able to achieve a single success of a transdermal patch that delivers for post herpetic neuralgia (which is where Phil Frost is looking at) then given could approach 1 billion dollars. If you do the math, pharma startups in the market place get a multipe of about 50+ sales (OPK)
As far as the number of shares---there are currently 310 million outstanding with an authorization for 500 million. They are going to increase the authorized number by a factor of 4. This does not mean that they
will issue that number, only that they have the authorization to do so.
I cut myself off when I was telling you my thinking on valuation...I was giving examples of Phil Frost companies....OPK has a market cap of some 60 times sales while an established company like TEVA sells for about 2 times sales. So let us theorize that ALQA could achieve a 30 times sales with a successful offering...then the valuation that is currently 24 million dollars could be 30 times that amount or 720 million dollars. That would translate to about $2.50+/share. That would be a
30 bagger! If the valuation of a single drug could be 1 billion (PHN patch) then the valuation of the company could be about $3.50/share or roughly 50 times the payout of your holdings. Not too many ways that I know of to make 30-50 times on an investment. Now with all of that said....this kind of investment is NOT for those who cannot risk their dollars. Clearly, not for widows or orphans. It is a very speculative investment for those people who are willing and able to sustain a loss of their money BUT the reward potential is enormous. That is why after great skepticism I have decided to take a long position.