Yes the NNVC funding of TheraCour's development costs is problematic, but only because of the other terms of the licensing. TheraCour should theoretically be funding itself (raising its own capital). Diwan is using NNVC to fund TheraCour, and generously. To justify that, the other licensing terms should be then be 'generous' (ie, compensatory) NNVC: no milestone payments, and a 10% gross profit royalty (net sales less COGS and less amortised development costs that were paid to TheraCour). If that were the arrangement, the funding by NNVC of TheraCour wouldn't be problematic.
NNVC isn't finding adequate and affordable capital anymore because the investment community is realizing that the current arrangement resulted in over a hundred million dollars in capital poured into an entity that still needs $100mm more for future pipeline development (assuming clinical successes) from somewhere and is not going to realize an adequate return (again, even assuming clinical successes).
I'll state my main point again: this next capital raise attempt (more accurately: the professional equlity investors being called on by the underwriter) is no doubt requiring Dr Diwan to make terms concessions. If he doesn't, the only source of funding would be some kind of collateralized loan (ie, debt finance) similar to his bridge loan, and that will not only not be enough to get us to Phase 1, it will necessarily be the end of the road for NNVC. At the current share price, 2,875,000 shares is just $6MM. And DD's loan has to get repaid, and we have no more authorized shares headroom.
So watch -with hope- for a new, smaller SA special vote announcement, a bigger S-1, and some changes to licensing terms. In other words, hope for DD getting things right with NNVC.
BTW this is why there was such a delay in the VZV license. Folks were pushing back on the need for it let alone on the same old problematic unattractive terms. He's been losing not only investors but also directors and executives. |
