The convertible note allow the shorts to continue to wait to cover. They now have no risk. The stock that will be issued on the conversion will cover the short. The shorts won and forced the company into this transaction.
A company only issues convertible debt when no-one will lend to them without the equity kicker. It is worse than just issuing equity. They give up the upside and still pay interest.
The problem with this kind of financing is that they announce a day before they price the options and warrants, allowing the purchasers to drive the price down prior to pricing. It becomes very expensive for existing holders.
Management is being negligent in not taking advantage of this drop to enhance shareholder value. They should be buying every share that they can at this price. It would be the best investment they could make if they really have the cash.
We are back to selling for cash on hand. Evidently the company itself has no value, or the company would be using its previously approved share buyback to increase shareholder value.
If you take out 40% of the workdays in a week and only drop 27%, that would indicate that scripts are accelerating about 13%. That should be a positive.
If you look at analyst estimates for 2014, VVUS is projected to lose $1.31. ARNA is projected to lose $.32. ARAN has $200 million more in cash. ARNA's stock price is about 1/2 of VVUS. Something doesn't add up here.