Gil -- Granted, it's good to finally get a buy recommendation... even if it is a Long Term Buy, with Speculative Risk from a small brokerage in Houston. Before we all get too giddy, however, I think it's important to look at some of the information presented in the recommendation.
At last October's shareholder's meeting, Gail laid out two items in very clear terms. Gail stated very clearly that according to their projection, they had a cash burn rate sufficient to last approximately three years. Secondly, their clinical trial progress would allow them to file the NDA this fall, which in turn if granted, would allow for revenues on the sale of Onconase to begin as early as mid-1998. According to the buy recommendation, which presumably is based upon the best current information available, the available cash is now sufficient for only the next 12 months, and the NDA is at least one more year farther out, with projected revenues not beginning (now) until mid-1999. As you can see, this means that we once again have a significant cash shortfall endangering operations.
Now, my question is "How is this possible?" Either the statements made at the last shareholder's meeting were incorrect, or our business management at ACEL is incapable of forecasting or adhering to even a 12 month plan. Do you realize that this means we went from having a one-year cushion to a one-year cash flow deficit... within only a 12 month period!! I tell you, ladies and gentlemen, that from a business perspective, that borders upon the unbelieveable.
So, yes Gil, I'm happy that we got some good news. But at what price? Where is the new money to keep going to come from? Are we to have yet another private placement, further diluting our shares?
There have been a number of positive indications, recently, that at least Gail is more willing to listen to investors. However, let's not lose sight of the fact that a) our President just resigned, ostensibly for good reasons we have yet to learn, b) our share price is almost at a 52-week low, c) the long rumored Cowen & Co. recommendation has never materialized, and d) we are once again, it seems, on shakey financial ground. Fundamentally, aside from the more open communications, nothing has really changed except that our competition increases.
I still maintain that we need to:
(i) attract a new President who has the respect of the finanical community, AND, tie his/her compensation to performance and increased shareholder value.
(ii) identify the performance requirements for the NDA and establish milestones for achieving that objective.
(iii) abandon the notion/focus that everyone who needs to know in the oncology community does, and significantly increase targeted communications towards the investment community, both institutional and private. How many times in the last year have you seen news coverage or investment forums focused on promising biotechs, with ACEL noticably absent? I believe that the technical approach WILL eventually take care of itself, but only if the company survives to carry out the work.
(iv) clean house in the BOD and get rid of any dead wood that no longer brings anything of value to the table. Times change, and ACEL can nolonger afford to treat this business like some kind of kid's club, swapping warrants and options like baseball cards. Recent appointments have been promising, but more strength is needed on the business side of the table.
(v) actually enter "significant discussions" with potential strategic partners, as the last 6 10Q's have suggested. Nothing will give this company a bigger boost, either with Wall Street or the FDA, than to have a high-profile strategic alliance in our pocket going into the NDA. As I said last year, if we are going to have an NDA by this fall, than ACEL must announce some alliance by at least April/May. We now see why nothing was forthcoming; because the NDA has once again been pushed farther into the future.
These are the main points, I think, that are important. Let's see what kind of responses we get from Gail/Tina on these and other issues? And by the way, I won't accept anyone trying to lay this situation off on Mike Lowe. One other item that was made very clear at the last shareholders meeting was that this was a company TEAM. Have a nice day. --John |
