Now in the WatchList. GERN has some converts out, and has reset the terms already. From the latest 10-K:
>>In June 2000, we sold $25.0 million in series D zero coupon convertible debentures and warrants to purchase 834,836 shares of our common stock to an institutional investor. The debentures were convertible at any time by the holder at a fixed conversion price of $29.95 per share. If unconverted, the debentures had a maturity date of June 29, 2003. The warrants to purchase 834,836 shares of common stock were exercisable at $37.43 per share at the option of the holder through December 2001. In November 2001, $10.0 million of series D convertible debentures were converted by the holder into approximately 1,011,000 shares of our common stock at a conversion price of $9.89 per share, reflecting a modification of the terms of these debentures. We amended the terms of the remaining $15.0 million of series D convertible debentures to carry a 2.5% coupon, have a fixed conversion price of $20.00 per share and have the maturity date extended to June 2005. We also amended the outstanding series D warrants. The amended series D-1 warrant to purchase 333,935 shares of our common stock is exercisable at $15.625 per share through June 30, 2003. The amended series D-2 warrant to purchase 500,901 shares of our common stock is exercisable at $25.00 per share through December 31, 2006. As of December 31, 2002, $15.0 million of series D convertible debentures and series D-1 and D-2 warrants to purchase 834,836 shares of our common stock remained outstanding. <<
Even after this run, it looks like the near term warrants are toast -- unless the terms get amended again. Both the warrants and converts have proven to be de facto toxic: surprise, we amended the terms! I sure wouldn't go long a company that did this on a regular basis.
Yahoo's numbers in the profile appear to be up to date:
biz.yahoo.com
Note the rise in short interest. Dollars to donuts some of this is convert/warrant hedging. Nice racket when you can the terms reset.
GERN said in the 10-K that cash was sufficient to get them through the end of next year. They have no significant revenue source, so it's a cinch they will be financing in another year or so at latest. They are not even IND stage with their lead compound, though they intend to file soon.
Weekly chart shows some room to run, with resistance another $1.5 points overhead (already overbought on shorter time frames):
siliconinvestor.com
Cheers, Tuck |
