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Biotech / Medical : XOMA. Bull or Bear?
XOMA 25.33-1.9%3:59 PM EST
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To: LLCF who wrote (8562)2/1/1999 12:36:00 AM
From: aknahow  Read Replies (1) of 17367
 
I agree, it's not the companies but the investment bankers putting these deals together. Managements are IMO less apt to understand the downside or other options that exist or could be created.

The other problem is dealing or negotiating from weakness. Not a slam at any company but just a fact. The sums required are not significant enough to get an investment bankers undivided attention and willingness to structure something that favors the company to a greater extent. This would make finding a buyer more difficult.

I do not see many deals where there is an intent to invest by the buyer. These are all mainly deals to permit secondary distribution of stock without full registration.

At this point I think a rights offering, with registration, would be better for XOMA and shareholders than the current or past deals. There are other methods, one would be to sell one or two year call options or warrants to foreign investors. This could be done every three months. Option premiums and actual exercise of the calls would provide the cash flow. This already has been done, by biotechs, but not on a regular basis.

Sure, the above is more difficult, because the investment banker has to look for a client that is not just going to redistribute the stock but make an investment in the company because they believe in the prospects and see the purchase of longer term call option as a viable way of establishing a position.
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