John,
Thanks for sharing your discussion.
A few comments.
1. They so easily brush off the impending end of 2 collaborations, with talk of new partners. Did he say why they were not renewed?
2. His comment about not anticipating the bottleneck in medicinal chemistry and pharmacokinetics is puzzling. What did they expect? Are they simply ignorant? Is there a problem with the compounds they are passing off?
This company has consistently failed to meet expectations that they have set. They have very rapidly altered their strategic plan of breakeven to moderate profitability, to one with a rising burn rate. This will be exacerbated by the Abbott and Roche conclusions. They have talked about major new collaborations for over a year now, with just the JNJ patent license deal to speak for. They have talked about multiple IND filings as imminent since they went public. They have a Pharmacia product dropped, which they failed to disclose via press release, but kindly let analysts know about. In the meantime, PCOP has signed a multitude of deals. Axys has been selling libraries outright which has been providing nice cash flows. Big pharma is increasingly shifting comb chem internal. The only deals Arqule has managed are 50/50 deals with biotechs, typically speaking, neither of which has the cash or experience to bring products far in the clinic, if at all. We know the economics of early licensings.
I'd rather re-enter at $10 knowing this company is back on track and in a healthy financial position than at $4 with the slow trickle of an eroding company. $48M market cap, $33M cash, which if things continue as they have been will be sub $20M by year end. The clock is ticking at Arqule. Trega anyone? |
