That's a thought, Wilder. In the meantime, I have another angle.
Ligand just received notice that a "collaborator" is selling shares, shortly after Elan gave notice that it was converting early. Connect the dots. Ligand is already off a couple of bucks. Thanks to Elan's poison put on its bonds from 3 years ago, it may need to raise a big chunk of change in the next year. It would appear from Ligand's experience that Elan will raise cash in part by taking profits on some of its equity investments in its partners. In most cases, because biotech has been in the crapper lately (or because they are private companies), there's not much profit for Elan to take. But there are three other exceptions aside from Ligand.
They are ATRX, ISIS, and EMIS. I started researching ATRX' situation, and it looks ripe for an Elan pullout.
In the summer of '00 Elan bought $12 million of convertible preferred (12,015 shares), 442,478 of common for $5 million, and a 5 year warrant for a million shares exercisable at $18/share. The converts go at $18/share two years from issuance, any time after July of this year, yielding 666,667 new shares available for Elan's sale.
Atrix currently goes for $22.50. Hedgies doing their research might well be shorting in front of this potential event. Thinking of joining them. Thoughts, you or anyone?
I know very little about the company. Oral interferon (or was it insulin, I know EMIS does that?), cancer related pain, cancer related vomiting. The latter two (part of the Elan JV) just getting into the clinic.
Cheers, Tuck |
