i think the term was greenmail back in the day..
...ITEM 4. Purpose of Transaction
The Reporting Persons met with the Chief Executive Officer of the Issuer on October 29, 2008. During this meeting the Reporting Persons stated that, in their opinion, the Issuer should, as a first step, immediately downsize in order to preserve capital. On November 4, the Issuer announced such a downsizing.
On November 5, 2008, the Issuer stated that it had cash, cash equivalents, restricted cash and short-term investments of $69.5 million, or $1.99/share, as of September 30, 2008, and expects to have $56.0-$62.0 million, or $1.60 - $1.78/share, at year end 2008. Further, the Issuer stated that its remaining cash will "carry the company into 2011".
The Reporting Persons believe spending the Issuer's remaining cash on the development of its early-stage drug candidates, technology platform, and general corporate infrastructure is fundamentally flawed, especially in light of the current environment for raising additional capital. The Reporting Persons believe that the company’s drug candidates are all high risk and are best developed (if at all) by larger companies with greater financial resources and a lower cost of capital. By the time any of the company's products could be commercialized, or even definitively proven safe and efficacious, the Issuer's existing cash resources would be depleted. The Reporting Persons believe that the investment community clearly lacks confidence in such a plan, as evidenced by the $0.61 per share closing price of the Issuer's common stock on November 6, 2008, reflecting only 31% of the company’s cash, cash equivalents, restricted cash and short-term investments as of September 30, 2008.
In lieu of the Issuer’s articulated plan, the Reporting Persons believe the Issuer should implement one of the following two plans:
1. Return as much capital as possible to shareholders as soon as practical. This would require an immediate further downsizing of the Issuer to a minimal possible level and monetizing its remaining drug candidates and other assets.
OR
2. Committing now to a cash tender of any and all shares of common stock at a fixed price on a preset future date. (e.g., $1.00/share on June 1, 2009). This would protect the downside risk of all shareholders while enabling the Issuer to continue to pursue its current business plan, if it so chooses. If the Issuer is successful in executing its plan, and thereby "beating the tender", most shareholders will likely choose not to tender their shares and, accordingly, the Issuer would retain the corresponding tender proceeds.
The Reporting Persons look forward to continuing to work with the Issuer to effectuate one of these plans.
ITEM 5. Interest in Securities of the Issuer...
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