Email from Pierre Laurin
[ Original here. — *Note*— IMO, after years of reading this poster's contributions, the post is credible. About the CEO's comments themselves, you may feel differently ...]
" I contacted Pierre on Friday expressing concern about the trading activity since the close of the last financing as well as elements of the latest Scotia update. I stressed the need to sign partnership deals to get the sp out of its current doldrums. Below is Pierre's response. He has given his permission for it to be posted on SH.
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' Hi Scott,
Many shareholders came to the AGM worried that we would run out of gas and wouldn’t be able to fund the runway to catalysts. We clearly flagged during the AGM meeting that we intended to deal with the $50 Million hole analysts had flagged, and that we were interested in getting Long-only US based financial institution focused on health care in the stock and make sure that if we were doing an equity raise, that no stock would be allocated to shorts. It is unfortunate that the stock performed so poorly during the weeks following the AGM. I have to insist however, that the financing, other than an unpleasant $1.70, was a success. Some shareholders are giving in to stories that the financing didn’t go well, that PLI will have to finance itself at $1.00 or even below… wow.
The board conceded in the current financing because it made strategic sense, not out of desperation.
- Aside from the share price, the financing is a modest dilution of ~4% (more optics given that pricing at $2.00 wouldn’t have made much difference)
- The financing strengthen the balance sheet in the midst of PLI in collaboration / partnership discussions
- The financing brings in US based health care institutional investors
The company has multiple ways to access capital, and do no intend nor have to raise money at lower value. This time, equity still made sense for the reasons mentioned above. I also discuss during the AGM and seem to have an overall consensus amongst shareholders that the wrong deal with our drug candidates is a far greater dilution.
Let’s take a couple of indications just for fun.
IPF
- PBI-4050 Monotherapy would target patients that have failed to tolerate standard of care as first indication. This is still ~35,000 patients
- Assuming a price similar to pirfenidone, this would represent ~$3 B in revenue…
- Assuming a 50% pricing and you are still at a $1.5 B of annual revenue – this is if the drug is only used as second line therapy and does not become a product used as first line because it is much better tolerated.
- The NPV for a product like PBI-4050 for IPF alone exceeds $1 billion and this is using conservative assumptions of 25% probability of success, 10% discount and market entry in 2021 and expensive clinical trials.
- NASH or CKD with diabetes each come up with an NPV 3 to 4 times higher than the one for IPF.
Bottom line: we are talking multi $ billion NPV that we are very carefully handling through partnering discussions. The wrong deal to excite the gallery and pump up the stock for few months, would eventually cap the value the company could reach. No companies enter into favourable deal with a weak balance sheet. Everybody that I was able to talk to during and after the AGM agreed with this approach.
The share price where it is – is the major cause of the nervousness amongst shareholders and is self inflicted. I know personally so many shareholders who are die hard PLI shareholders but have to sell shares to cover their margin exposures, sold shares to profit from another potential short term gain before returning in the stock.
Now we will update very soon the shareholders on our forthcoming H2 2017 milestones and we will continue to deliver on our milestones. The company is funded to execute on major catalysts, has increased its institutional shareholding and attracted smart US healthcare specialist investors and analysts.
All in all, we are in a much better shape than we were at the AGM at $2.40…. I am ready to place my bet for the sp by year end and at the next AGM…
Best regards
Pierre Laurin ' "
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Jim |
