Quick notes on cash into the company:
1) Money in from the sale of shares: with regard to the S-3 registration of 3 million common shares dated 9/4/98, management has marked the box "yes" that asks "if any of the securities being registered are to be offered on a delayed or continuous basis..." I read this to allow for the possibility that the shares will not be sold immediately and, perhaps, not all will be sold eventually. This happened with the Series C preferred last year, in which only 63% of the number given in the registration statement were eventually issued. ( If the full 3 million shares are sold, we're up to 40.2 million shares outstanding. As of the date of the registration, Castle Creek still holds 4,500 Preferred C shares. )
2) Money in from Bausch & Lomb: the S-3 also states that BOL will pay $1 million to PARS when it receives regulatory approval for LE-T in the US, plus an additional $1.6 million following similar approval in certain markets outside the US. I think the US money might come as early as late 1999, followed later by the European-related funds.
3) Partner payments for HU-211 and Tamoxifen Methodiode.
HU-211: Assuming the unblinding of the first two cohorts of HU-211 Phase II go well, we ought to be able to find a well-funded partner for Phase III. That partner would probably kick in a nice amount for cash advances against future sales. BOL gave PARS $5 million and made a $2 million investment in its common stock in 1996. The potential for HU-211 is a lot higher and so should be the cash advance. However, I'd also be curious if any thread readers can make an educated guess as to how much money PARS will have to ante up for Phase III. BOL, although it gets 70% of the revenue stream from Alrex & Lotemax, only put up 50% of the Phase III clinical trial costs for those drugs. Ought we to expect a similar 50%-50% split for Phase III Hu-211? And what about the revenue percentage left for PARS?
Tamoxifen Methiodide: I believe the company will seek out a partner earlier in this situation than it has in the case of HU-211 in order to add cancer research experts to its team. (The 1997 annual report already specifies that in 1999 the company plans to have its "tamoxifen analog program developed to a stage where [the company] will be able to secure a strategic partner for that program.") If so, additional funds may come from the outside for development of this drug in late 1999 when PARS will probably finish Phase I clinical trials. Since generic tamoxifen (ours is a patented analog) is already being sold by BARR Labs and Zeneca, I'm hoping this trial will go well.
4) Cash in from sales of Lotemax and Alrex. We're still in relatively early ramp up, but we've clearly turned a corner from being a total cash drain biotech to an emerging pharmaceutical house. We have top line.... quotes.globes.co.il
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It's that middle period in 1999, when Alrex & Lotemax probably won't cover the cash burn, that made managment register the latest common shares. I'd welcome opinions about this issue. Wall Street seems to have taken a dim view, but perhaps the upswing in trading from late morning to the close on Friday was actually a sigh of relief that the number of shares registered was not, in fact, higher.
-Ariella |
