From early this month (might answer your Q)
Wed: Pharmos has only just begun
It's very hard to estimate Pharmos's current value, but compared with anything else, its' worth a lot more.
Shlomo Greenberg 1 Oct 03 16:27
Yesterday was a great day for Pharmos (Nasdaq: PARS) chairman and CEO Dr. Haim Aviv. First, the FDA granted fast track status for Dexanabinol. Second, Pharmos raised $21 million at much better values than in previous rounds, which barely gave a premium for the share.
The key question, of course, asked by many Pharmos lovers is who the sellers were. The answer is simple. The sellers were the investors who bought the share at under $2 last year, bondholders who sold their convertible bonds, moneymen and hedgers. And why not? Is there a lack of sellers? Not at the rate at which this share has been rising.
The harder question is how to evaluate Pharmos now. If Pharmos were a US company and Dr. Aviv a scientist at Cornell University, Pharmos' share price would unquestionably be worth six or seven times its current market price, i.e. $27, and six or seven analysts would be giving it a "Strong buy" recommendation. Institutional investors would be buying in droves and strategic partners like Johnson and Johnson (NYSE:JNJ), Merck and Co. (NYSE:MRK), Pfizer (NYSE:PFE) would be knocking at the door. But Pharmos is an old Israeli story, Dr. Aviv has been in the market for a long time, and Dexanabinol has not yet been approved, so the company's share price stopped rising at $2.52.
It's very hard to estimate Pharmos's current value, but compared with anything else, its' worth a lot more. After all, ladies and gentlemen, didn’t you pay $15 for this share when it really wasn’t worth it at the time? Who knows? If all goes well, Pharmos could be a fantastic windfall in a couple of years, and if it isn’t, what are you worried about? You calculated the risk when you bought the share, didn’t you?
Pharmos raised money yesterday in two parts: $5 million immediately and $16 million when the institutional investor gives the go-ahead, a technical matter. Pharmos issued convertible bonds at a strike price of $4.04, and bearing 4% interest. The bonds can be redeemed in 13 equal monthly installments beginning in March 2004, so the loan will be closed in April 2005. The subsequent $16 million will be held in a trust, with an acquisition as the goal. In addition, Pharmos gave investors an option to buy 5 million shares at a strike price of $2.04. Many people will use this move to explain why the share didn’t rise higher yesterday, but who are we to spoil somebody else's party? That's enough for today about Pharmos. I am sure that this won't be the last celebration. By the way, take note that ImClone Systems (Nasdaq:IMCL) rose above $40, and compare. |
