The shorts are facing daily increases in share price - the most dangerous situation that can transpire in the context of high borrow costs. It means that borrowing additional shares to drive down the price may result in additional losses - if the shares can be found. When the cost to drive down the share price exceeds the dollars gotten out at a lower price, the value of driving down the shares lessens. When a lower volume day no longer allows the shorts to drive down prices, they are likely working against themselves. The competition becomes one of who can get out earliest at a better price. Many have already bought calls to hedge the potential loss, but the daily grind higher is a huge threat. 19 million shares is a boatload in tiny company like ZIOP. A transaction in the works could take us anywhere, except down.
I agree that Griffin is not particularly credible, but there information is good and credible. And in the years I've followed and invested in RJ related companies, I have NEVER found him anything but 100% credible. While it's nice when analysts like what you own and are good, what I love about RJ is the honesty and accuracy. I don't have a price for where this will be in a year, but all the sounds and currently, all the data points towards good things for us. Patience. A wee bit more patience...
Albert Einstein was noted to use thought experiments to arrive at important discoveries and conclusions. Clearly, I'm no Einstein, but consider these two scenarios. 1. ZIOP partners CAR T and gets 200MM up front and lots of potential back end, and a new relationship with a larger player. 2. ZIOP is sold outright in exchange for a 1 BB in stock from a large player (CELG, JNJ, etc.) and a guarantee of billion in cash investment in ZIOP related NDIs. Now, which is more likely to cure or show benefit in patients sooner? Which brings more to market sooner? Which is more likely to compete with the timelines of the competition? 50% of which is likely to have a greater present value for XON?
Let's try it again. What does CELG have that XON could benefit from? What does XON have that CELG could benefit from? What does ZIOP have exclusive of XON?
I don't think it takes Einstein to see that the larger needs of the world of Oncology, Pharma and Business writ large demand the movement of what ZIOP has to a large and well heeled player. Now, does Kirk have what it takes to make deal? Tune in next week....
There are some people that think this will be a partnering deal. I don't think so. While it's true that value is lost in that the price of less proven technologies will go on the cheap, there is also a larger and more significant value gain here by doing a deal. This is Pharma, and time is of the essence. A large bankroll matters, and ZIOP doesn't have it. XON will not spend shareholder money in development. Kirk will find a partner with deep pockets and oncology development history and capacity. He'll "sacrice" some future value in exchange a larger capacity to attain future value knowing XON will still ge it's 50%. Were you to play around with a calculator, paper, and present value equation or tables, I believe you'll find a sale at this juncture has a higher overall present value than a partnership and future higher potential value on potential NDIs, though it's very difficult to guess at dollar amounts. As for today, the shorts will fight like heck to close this below the 1 yr 200 day moving average. 66 million bucks on the line. Still, doubt they can do it.
Of course, now the speculation on price has to come. And a moment of silence for the 19000000 shares that are short.
With RJ noting a significant transaction underway, I have to think ZIOP is on the block for the right oncology unit and not just partnering. First, Kirk has total control, through share purchases and backers, (many of whom he has never met). I believe he can work any deal the benefits all, and I've never seen Kirk do anything that isn't a win-win. Second, ZIOP is too small to carry through with multiple new drug indications and has neither the people nor capital to compete with a well financed existing player in the space. Third, ZIOP is small and can be purchased outright without stretching a larger players finances. Fourth, a new player would gain all of XONs potential oncology indicants, something a large player can afford to take advantage of but ZIOP has little capacity for significant expansion. Fifth, ZIOP doesn't add much to the equation, the great minds are at XON and I have to think pairing with a much larger group would serve XON, ZIOP and the patients best.
Well, it looks like we have transaction underway. Kirk making a Pharma deal -- can't think of anyone better to do that, at least not on this planet. You're in good hands with RJ.
I suspect the 5 pm XON call today will include important ZIOP updates. They will be listened to carefully. Regardless, I suspect the huge short position to color the data with a sell into the news after market and early tomorrow. It's important to do your own DD on the information release and not be colored by what the shorts need to do to try to protect their 66 million dollar position which they're paying more than 1% a month to maintain. That's a pretty big burn rate to hold a short against a rapidly rising stock held by Kirk, and other astute wealthy investors that will benefit from exercise of options at a still higher price. Just some thoughts. ZIOP needs to partner and that will be more lucrative with momentum established by good research news and a plan to reap the benefits related thereto. Time will tell.
XONs call on Thursday should have news for ZIOP and some shorts don't like to by on the hook during probable news and also know the pattern. They have been exiting since this was lower and will continue to exit until news, and re-enter Thursday after the call, when the stock is trading higher, unless the news is earth shaking -- as in a partnership or wildly successful results. If the news is modestly good, it'll seem bad as the shorts knock the price down from these new highs. Of course, if the news is steller, the shorts that exit prior to news points or bought calls in the past few weeks will be just fine. We longs on the otherhand don't enjoy the roller coaster quite so much.
Numbers are okay -- neutral in my view. Still have cash to 4th quarter of next year. Will need to raise or partner/sell within 6 months. News matters. If the data is good, all is well. I'm okay with playing ones cards "close to the chest", but you'd think we'd have gotten a better glimpse by now. ZIOP cannot bring multiple NDIs through the FDA process. This needs to be partnered within 6 months if the data allows for it. Otherwise the oncology development market will pass us by. That raises the short term stakes for both sides of the equation - both shorts and longs. One thing is for sure, good new or bad will have an oversized reaction.
I pulled many 10s of thousands of shares out of the hands of shorts this morning. My feeling is that the Washington Post article started the shorts scampering. It can run hard on that alone, in my view. When a small number of hedges move, the price goes up and it feeds on itself. There are many, many shares short and not much of a free float here. As well, there are some big players that can ignite a short squeeze on their own. It can run hard without news. The real question is...is there any news coming? Either good data or partnership are meaningful, the latter far more than the former at the stage we're in, in my view. Then there is the history of the stock running up prior to a raise, which cannot be ruled out. No news is just that, no news. Place your wagers. I'm a faithful follower of Kirk, but this one has stung me more than once. GLTA
Standing next to me in this lonely crowd
Is a man who swears he’s not to blame
All day long I hear him shout so loud
Crying out that he was framed
I see my light come shining
From the west unto the east
Any day now, any day now
I shall be released.
I would add that a 10,000 foot reading of the posts on Investor Village ZIOP board suggest that the followers - both long and short - have been reduced to verbal cannabalism and ad hominem attacks, proof that the data is far too long in coming. Oh, to have something to actually talk about.
Wish I knew the answer. With what we know, probably not. In order to turn this around, ZIOP needs to partner with a larger player more experienced at bringing NDIs to approval and more capable of financing additional NDIs. We have had no positive data or FDA progress on anything for a very long time and it's difficult to justify even a market cap of 250MM without something more solid than the hope we longs all share that Kirk has a plan. While those of us that are long are typically people who have invested with Kirk before, his change of modus operandi with XON and the irrational exuberance and failure with Pali on balance are problematic. As well, there was talk of data in the first half which has not come to be, and historically with ZIOP, a failure results in removal from the powerpoint and little fanfare. Again, on balance is Kirk's obvious support for oncology in his talks on behalf of XON, as well as hiring a powerhouse tag team of oncology expertise. Still, it's biotech and success on the phase trials is the pre-eminent defining characteristic of success, especially that illusive phase III. Ziop has nothing far along, and an honest view suggests we really don't know what we have. In the context of a heavily shorted biotech stock with no news, the results are endless bleeding. Here we sit, dependent on news of success or partnership, both of which are not new to the considerations of ZIOP. It's been rough with little upside. A like investment in the S&P index at the time Kirk came in for the share price then traded would now yield an equivalent share price of over $9.00 a share. For our costs and problems, we're treated to a veritable news blackout on the debacle of Pali. What's ZIOP work in market cap? That's a question now answered with how many and how faithful are the supporters of RJ and how confident are they that he can make real progress in oncology in a timely way.
Settlement Date Short Interest Avg Daily Share Volume Days To Cover
9/15/2014 18,817,916 791,341 23.779781
8/29/2014 18,720,017 389,584 48.051298
8/15/2014 18,950,150 537,024 35.287343