>VaxGen had approximately $20 million dollars in liquid assets
>prior to the IPO, and with the IPO proceeds has sufficient funds
>to take them through Phase III testing.
I dont think so.
They will only have enough money in the case they can finish
the phase 3 trials in 2001 when having reached the 30% efficacy.
Let us make some estimates.
The underwriters recently exercised their option to sell another
465,000 shares. That results in another $5.6 million for VXGN. Together
with the $36.5 million of the IPO the company got $42.1 million.
So VXGN now has about $62.7 million cash and equiv.
They have now 11.3 million stocks.
Now there exist some stock options, which will further dilute the
stock: (excerpt from the prospectus:)
-- 1,159,171 shares of common stock issuable on exercise
of stock options outstanding at May 31, 1999
at a weighted average exercise price of
$8.60 per share;
-- 593,650 shares of common stock reserved for future issuance
under our 1996 stock option plan;
-- 28,929 shares of common stock reserved for future issuance
under our 1998 Director Stock Option Plan;
-- 459,825 shares of common stock issuable on exercise of
warrants at May 31, 1999 at a weighted average
exercise price of $7.49 per share;
After the exercise of these options, we have about 13.5 million stocks
(a dilution of 2.2 million stocks or 19.5 per cent), and the company
gets another $35 million, where I assumed a price of $35 for each
of the 594,000 stocks of future issuance. So all together the
company has about $98 million for their future costs.
The money they burned was (see prospectus):
1996 1997 1998
-------- -------- ---------
Net loss in mio $(2,082) $(3,060) $ (9,163)
In Q1/99: net loss: $ 3.8 million.
So in extrapolation of these data I would ESTIMATE the following
burning rates: (in millions)
case A: they do not need more Phase 3 trials and the company
would not make profits in the next five years, as they stated
in the prospectus:
1999 2000 2001 2002 2003 2004
--------------------------------------------------------
$20 $25 $25 $25 $20 $15
All together they need $130 million in the next five years.
case B: (my guess:) they will do even more Phase 3 trials
according to the different subtypes of the HIV.
1999 2000 2001 2002 2003 2004
--------------------------------------------------------
$20 $30 $35 $45 $45 $45
In total then they need here $220 millions.
(Note that the numbers here are a GUESS!)
So in both cases I think the money they will need exceeds the
available cash of about $100 millions.
Case A is not an accident, because this is the case of success,
and then they will most probably be able to issue new stocks
at a very high price, so there will be practically no dilution.
Case B is the failure case, and then the stock might have a much
lower price. Let us take a simple example: Let us suppose that they
issue the new stocks at a price of $10. In this case they
have to sell another 12 million stocks, so the dilution is about 2:1.
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