Hi, Wayne -
"Jim, what do you think DMX is going to do for money after the end of this month if approval has not arrived. Don't see anything on the horizon....."
I don't know. Maybe we could chip in and get RK a trained monkey with a tin cup, and she can grind organ tunes on a Bay Street corner?
Just joking...actually, we're going to need the monkey with the tin cup.>g<
Okay, I'll be serious. This is a time of maximum uncertainty. We don't have negative information, we don't have positive information - we don't have any information.
There's absolutely nothing out there...not even a decent rumor.
I remain convinced that the interactive phase of the Approval process is over, and that the other trials referred to are for marketing purposes. That's what I believed a month ago, and I still believe it.
To me, that means Pennsaid is still in Director Review. That said, it could be that RK has The Letter on her desk now, and is finalizing the deal with JnJ.
Or, it could mean that RK, like you, sees no sign of imminent approval, and is considering taking the rumored US $20 million (less the $2 million upfront) that was supposedly offered originally.
So, that's one possibility. Just speculating, here; closing a deal with JnJ would probably mean an immediate payment - say $4 or $5 million upfront, and milestone payments after that. The share price would likely firm up.
If the terms of the original Standstill Agreement are being honoured (as they appear to be) - then that would mean the end of negotiations. The Standstill Agreement was a contract in which JnJ was prevented from buying DMX shares, and paid an upfront of $US 2 million, in return for the right to negotiate for marketing and distribution in the US.
It is logical to conclude that RK and JnJ have been negotiating right up to now, even as they worked together. It also seems logical that RK has been holding out for a negotiation position based on having Approval in her hand - else why continue negotiating? Why not just take the $US 18 million, and get on with life?
So, that seems like option A.
Option B is less clear. It could be a while until Approval comes. Over the last few months, we saw a large number of shares taken at ~$2: but now, buying seems to have dried up. Some claim that is because of "problems". That may be so, but I'd like to propose another reason. We have seen a number of houses accumulate large positions. I'm not sure (especially with Anonymous) who owns what, any more.
But I do know that as soon as a house starts to own a position that exceeds 10% - the regulatory game changes. That would be any house who holds 5.2 million shares, or thereabouts.
So that may explain why the big buyers have backed off.
Of course, we have to consider the possibility that things aren't as good as hoped for. Maybe we're looking at an Approvable Letter.
Acqua? Well, we know that RK favors Acqua as the easiest course - but in the absence of buyers, Acqua starts to look pretty ugly.
Share Rights Offering? Maybe. PP? Maybe. But at what price? At DMX's present burn rate, a lot of shares are going to have to move, just to guarantee survival for another 6 months. In any case, time is getting short, for either of these options.
From 'way out in left field, maybe some upfront money for WF10? Not serious about this, but if the P3 was spectacular, maybe it's an option.
Float paper? Not very likely, I would think, but maybe...
There are options, including cutting DMX back severely, until Approvals arrive: cutting the burn rate. Letting the Sales Force go, etc. Painful, but perhaps necessary.
I'm not sure how it would work out, Wayne. But there are options, IMO.
Regards,
Jim |
