Jonathan, thank you for taking time out for your excellent posts. You've gone above and beyond the call of duty. I'd like to add a further comment on the issue of dilution. You wrote:
Another line of questioning concerned the "dilution" of our stock by the authorization to issue an additional 15 million shares. Nelson Campbell commented that there is in fact no dilution if the issuance of stock results in a Company that is worth even more. In that these shares are necessary for the infusion of an additional half million dollars of working capital, there is no real dilution. ((Another editorial comment: this is an authorization only; it is not as if that many shares will be sold soon. Furthermore, the shares that go to Biomar are restricted; they cannot appear on the market without notification. [But why would Biomar sell shares anyway, reducing the value of the remainder of its vast holdings??]))
We all expected the stock price to increase last February when John Babish presented the company's plans to launch AndroVir at the Smith Barney conference. There never was much of a boost and the price actually fell within a few weeks of the presentation. Part of this drop in price was probably caused by the company's failure to follow through and hire an AIDS doctor as promised, but at least some of the price drop was probably caused by Babish's stock sale. His stock sale pushed the price down in two ways: 1) By selling his stock there was more stock available for other buyers, thus depressing its price. 2)Other stockholders became worried that something was wrong with the company. Whenever an insider sells a lot of stock investors get the jitters, causing them to sell stock and thus lowering the price.
Colin Campbell must be well aware of this. He must be aware of what would happen if Biomar were to dump a lot of stock on the market soon. Therefore, I agree with you that their dumping of stock is highly unlikely. I think Colin Campbell was aware of the dangers of stock dumping over a year ago. This is from Babish's defense which I posted last August:
www4.techstocks.com
19. On or about February 26, 1997, T. Colin Campbell (who
was then a Board member but who has since resigned) spoke with
me and asked me to stop selling shares. I expressed to him my
frustration over the contract discussions, and he said he would see if he could push the discussions forward. I respected Mr.
Campbell's request, and I did not sell any more shares until after my resignation was made public. I also told Mr. Koch that I had
stopped selling shares.
Dr. Campbell was against Babish's stock sale, probably because he realized it would hurt the company. Not only did he oppose dumping back then, but as far as I know he held onto all his stock even through the darkest days when the company looked like it was going down the tubes. I would be very surprised if he were to sell his stock before we see an appreciable price rise.
Robin Messing |
