As far as investing in ABIO is concerned, this means two things: 1) They cannot fund the study themselves without a massive dilution and change of control which would nullify one of their most important assets: namely their tax loss carryforward and 2) When it comes to licensing, despite their good i.p., they come from a weak negotiating position.
However, even if their position is weak, the relative cost of funding the phase 3 trial and paying ABIO milestones and royalties is a joke. The phase 3 involves upfront payments to the CRO and all the other fees associated with the trial and NDA. So, even if they negotiate a single digit royalty without contributing another dime to the study, this would be positive for shareholders. If ABIO had $30 MM in cash, I'd be more concerned because they might be dumb enough to fund this study on their own. Bec use they are so cash strapped this becomes a non-issue. In the meantime, as they negotiate a license, the stock will gyrate to the tune of their press releases and journal studies (all of which are worthless without the definitive phase 3).
I'm buying at these prices because it's a hot money stock and there's a reasoable chance that they'll get a chance to license this drug, due mainly to the fact that big pharma likes the large market bucindolol addresses and they have so many patent cliff issues of their own.
Well add to this phase III trial what investors are still waiting on and that is the 3200 patients that need to be enrolled in the SPA trials requested by the FDA in the CRL that was issued with their REJECTED NDA. Those trials have a min time frame of 6 years from start to finish.
Have fun, don't say you haven't been warned.
I understand your short thesis. I look at this stock as an option for license trading purposes. If they can't find a licensor, BK is a real possibility. They'l twist in the wind for 6 months or so. As far as fundamentals are concerned, I don' think the study would take six years because patient accrual with this large population would be relatively easy. I'd give them a 3 year study/unblinding horizon.