In my view, it's a good news / bad news situation.
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The Good News:
Bioject gets $2.5M in cash allowing it to stay afloat for a while longer.
Potential future revenue stream of royalties from GlucoTrax sales of 3% up to a $10M ceiling and 1% thereafter, with no limit.
No further need to come up with short term cash to finance further GlucoTrax development.
Ability to re-focus on core jet injection business, which still has quite a bit going for it.
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The Bad News:
Bioject spent in excess of $15M on the GlucoTrax project. In order to finance this expense, they borrowed from Elan, ultimately issuing convertible preferred stock instead of debt, which remains outstanding. The quarterly preferred dividend accrues at approximately $350K per quarter. If Elan converts all of their preferred stock and warrants into common stock, they will own in excess of 40% of Bioject.
The total amount being paid by Medisys is $17M, only $4M of which is going to Marathon, the Bioject/Elan joint venture, and only $2.5M of that is going to Bioject. So $13M is going directly to Elan. I was told that there were “other” technologies being licensed, but it looks to me that Elan has taken advantage of Bioject's current weakness and sold the same technology twice, leaving Bioject holding the bag. All in all, it was a pretty good day for Elan
I don't get the feeling that Bioject management is going to be significantly changing their ways in the 2 areas where I have asked for change, which are:
1. Aggressive marketing of their product, in order to promote public demand.
2. Open communication of their story to their shareholders and to the investment community.
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Marc Kahn |
