Hi fox -
"...would not the 2mill (or whatever amount is being committed to these additional trials) be better spent taking Fungoff to the next and, I would assume, higher trial level. I know this is a bit of crude logic, but a higher trial level should mean higher profile drug - hence making it a more leveragable asset?"
Good questions. I'm not sure I can give a "correct" answer, but maybe I can give one that makes some sense.
Most of us who invested in Dimethaid Research invested in a company that had a number of product possibilities. For years, we were lead to believe all these were in active development.
Beyond Pennsaid, they included Fungoff, and a number of possible areas for WF10. The importance of the other therapeutics went beyond their medical application to the question of distributing risk. Put it another way: few investors would have put their money into a company that was staking everything on the success of one drug.
In the time that I've held DMX (3 years) the company never let on, until last fall, that R&D had stopped. In that time, after a long series of Acqua extensions, we subsequently saw the high-priced Bahamian financing, the unsuccessful Rights Offering, and then the Paradigm equity financing, disguised as "conventional" with a still-unseen "analysts's report" to accompany the costly premium. Concurrent with these distributions was borrowing and debt at obscene rates, in an era of historically low interest rates.
It was at that point that management's contrived stories about financing fell apart, and we began to understand that we had been flimflammed: Dimethaid used equity financing, and ruinous borrowing because it had no choice. For years, RK had told us that she used equity financing as an option. Now we understood it was no option at all: The Street wouldn't give Dimethaid Research a nickel.
So, she's been stringing us a line since January 2000. That's when she went to equity financing, instead of going back to The Street for a conventional financing, as she once did - to the tune of $30 million.
www2.cdn-news.com
Since then, institutional support has declined to nothing, from 40%. DMX was dropped from the TSX Index in September 2002.
So for 4 years, Dimethaid has been cut off from conventional financing. Did management tell us that? No. Did management want us to know? Judging by the elaborate cover story, by which they tried to disguise the Paradigm financing, no.
Management did not want investors to know.
Who knew? The Street. How do we know they knew? By their absence. By the absence of analysts. By the absence of financing. By the absence of funds. By the absence of institutional ownership.
What caused this rift between The Street and Dimethaid management? Ah, that's the question, and the answer is out there.
But for we unfortunate investors, time has finally made the truth clear. Management's attempts to disguise the Paradigm financing only confirm the reality.
For 4 years, Dimethaid has been living on a shoestring, and management's statements about a promising future have been a cover job on the ugly truth.
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So back to your question: why not put R&D money into Fungoff, thus giving the company a more diverse, and less risky product base?
I think the answer may lie in the source of the money - but this is only a guess. In a previous post, I said, "Someone gave her money."
The source of the money - or the source of payment for the trials - must have linked the funding directly to Pennsaid, and nothing else. We know Dimethaid doesn't have enough money to pay for the trials itself. As you point out, if Dimethaid had money, the obvious and intelligent thing to do would be to get Fungoff (or WF10) moving, to cut risk. The fact that isn't being done can only be ascribed to -
(A) Faulty vision of what's in the company's long-term best interests (quite possible)
(B) Externally-imposed direction in the best interests of the funding source - ie., we'll give you money, but only to develop Pennsaid some more, because that's what we want.
It sort of suggests Solvay, or McNeil - doesn't it?
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Fox, I agree with your analysis - any move that diversifies Dimethaid's product base would be a good one. This move seems to be going in the wrong direction. These are my guesses as to why.
Regards,
Jim |
