Arnie -- I'm gonna buy like crazy when this stock reaches $2.
PARS investors like to talk about HU-211 as the "big bang" drug we have in our arsenal to get the stock price to $20, but Lotemax and Alrex are the cash flow babies that make this stock a dramatically different investment from what it was in February 1998 before the two FDA approvals. I know it's not evident in the stock price, but what's happening -- temporarily -- to the stock price is separate from the fundamental improvement in the company's prospects.
PARS filed an amended 10-K July 14. The section on the Preferred stock financing done in March is easier to read than the S-3 document that accompanied the filing. Here are the key lines:
<< On February 4, 1998, the Company completed a private placement with institutional investors of Series C Convertible Preferred Stock and warrants to purchase 650,000 shares of common stock, generating gross proceeds of $5 million. The preferred stock carries a 5% dividend payable in common stock and is convertible into common shares of the Company, 60 days subsequent to the date of issuance. For the period ending 180 days after the date of issuance, the conversion price is 90% of the average of the low trade prices of the Common Stock for the five consecutive trading days ending on the day immediately prior to the conversion date (the "Variable Conversion Price"). Following such period, the conversion price
is the lower of the Variable Conversion Price or 120% of the average of the closing bid prices of the Common Stock for the trading days beginning on the date which is 151 days, and ending on the date which is 180 days, following the date of issuance. Until converted into common stock, the preferred stock has no voting rights. The warrants issued to the investors are exercisable at prices ranging from $2.28 to $2.67 per share, commencing one year after the closing for a three year period.>>
Which means we're not getting pressured by warrants -- they're not in the game till next spring. But read this again: <<For the period ending 180 days after the date of issuance, the conversion price is 90% of the average of the low trade prices of the Common Stock for the five consecutive trading days ending on the day immediately prior to the conversion date .>>
180 days after the Feb. 4 issuance date brings us to the first week of August. Notice how under pressure the stock price is coming to the end of this 180 period? Can you say "short slam?"
Somebody brought 20,000 shares to sell very late in the afternoon today on an otherwise lackluster trade day and tanked the stock in the last half hour of trading. I bet we'll creak down close to $2/share by the first week of August. It's not that different than what happened in February before the FDA approvals EXCEPT that we've got those approvals in hand now.
That exception is a rather large one, don't you think? And lots of good news -- allergy season performance for Alrex, unblinding of trials for HU-211 -- is due the month after the hedge fund may lift the weight from the stock.
Happy trading,
Ariella |
