Herb Greenberg has a lot to answer for in his shoddy piece, in which he posted, without checking, the misstatements of fact of a short seller with an obvious agenda.
Here is the link (I don't think you need to be a subscriber):
thestreet.com
" . . . the now-fallen biotech giant, which lost its air after Johnson & Johnson (JNJ:NYSE) chose not to exercise its option to co-promote a new version of Sepracor's allergy drug. 'It had high debt, extremely decreased revenues, insiders didn't own a share and somehow this stock was going up because of momentum players. As soon as the momentum broke, I went short.'"
But of course
(A) it is flatly untrue to say that "insiders didn't own a share" [actually, they own 2.425 million shares, 7.4% of the company],
(B) to say that SEPR "had high debt" misleadingly overlooks the facts (1) that virtually all of the debt is low-interest convertible debt, much of it convertible at $47.369/share, below even current stock prices, and (2) that SEPR has cash [$462 million at 3/31] equal to much more than the $300 million debt convertible at $124.875 [and, not so incidentally, is putting that cash to good use in developing its ICE's], and
(C) to say that SEPR "lost its air" with the JNJ decision about "SEPR's allergy drug" [not "one of SEPR's four allergy drugs"??] largely overlooks SEPR's other five partnerships and 20+ unpartnered ICE's.
The facts are that SEPR is financially very strong; is run by executives who, strikingly, have never sold a share (the CFO lost most of his in a divorce; a couple of outside directors sold part of their positions earlier this year); and has a pipeline that compares favorably with most of big pharma.
This suggests (1) that Greenberg, if he wants to be taken seriously as a journalist, should do his homework better (maybe read a balance sheet, Herb? Spend five minutes on Yahoo or somewhere to check the insiders' stockholdings? - have you, Herb, ever heard of a development-stage biotech where the "insiders didn't own a share" - stay awake Herb), and that (2) he should be more wary when quoting an "analyst" so obviously in full self-promotion mode. This is a long way from serious financial "journalism."
-- RCM |
