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Biotech / Medical : VaxGen Inc.-The 1st AIDS Vaccine in Phase 3 HumanTrials -- Ignore unavailable to you. Want to Upgrade?

To: glen who wrote (99)	7/18/1999 4:43:00 AM
From: Manfred Sondermann	Respond to of 250

>I infer that if you had done more research in addition to just >reading the Prospectus, then you might not have even bought >VXGN stock. Thank goodness for naivete, eh? May be I would have bought less. Never forget one thing: the game is not jet over! Because this stock has a lot of hype potential (Gates, Allen, Francis, Nobel price, conquering AIDS after conquering the moon :) , this stock might take large jumps in BOTH directions, up AND down. I personally am not very happy with this high stock price right now. I would rather like to see the price a long time below $20, so that the big investors could buy a lot more of this stuff. This stocks better has to go into firm hands to diminish the floating rate even more. Then, in case of FDA approval, this stock might go up in unbelievable highs. And in case of failure I think the stock then might fall more disciplined.

To: glen who wrote (99)	7/18/1999 4:53:00 AM
From: Manfred Sondermann	Respond to of 250

>VaxGen had approximately $20 million dollars in liquid assets >prior to the IPO, and with the IPO proceeds has sufficient funds >to take them through Phase III testing. I dont think so. They will only have enough money in the case they can finish the phase 3 trials in 2001 when having reached the 30% efficacy. Let us make some estimates. The underwriters recently exercised their option to sell another 465,000 shares. That results in another $5.6 million for VXGN. Together with the $36.5 million of the IPO the company got $42.1 million. So VXGN now has about $62.7 million cash and equiv. They have now 11.3 million stocks. Now there exist some stock options, which will further dilute the stock: (excerpt from the prospectus:) -- 1,159,171 shares of common stock issuable on exercise of stock options outstanding at May 31, 1999 at a weighted average exercise price of $8.60 per share; -- 593,650 shares of common stock reserved for future issuance under our 1996 stock option plan; -- 28,929 shares of common stock reserved for future issuance under our 1998 Director Stock Option Plan; -- 459,825 shares of common stock issuable on exercise of warrants at May 31, 1999 at a weighted average exercise price of $7.49 per share; After the exercise of these options, we have about 13.5 million stocks (a dilution of 2.2 million stocks or 19.5 per cent), and the company gets another $35 million, where I assumed a price of $35 for each of the 594,000 stocks of future issuance. So all together the company has about $98 million for their future costs. The money they burned was (see prospectus): 1996 1997 1998 -------- -------- --------- Net loss in mio $(2,082) $(3,060) $ (9,163) In Q1/99: net loss: $ 3.8 million. So in extrapolation of these data I would ESTIMATE the following burning rates: (in millions) case A: they do not need more Phase 3 trials and the company would not make profits in the next five years, as they stated in the prospectus: 1999 2000 2001 2002 2003 2004 -------------------------------------------------------- $20 $25 $25 $25 $20 $15 All together they need $130 million in the next five years. case B: (my guess:) they will do even more Phase 3 trials according to the different subtypes of the HIV. 1999 2000 2001 2002 2003 2004 -------------------------------------------------------- $20 $30 $35 $45 $45 $45 In total then they need here $220 millions. (Note that the numbers here are a GUESS!) So in both cases I think the money they will need exceeds the available cash of about $100 millions. Case A is not an accident, because this is the case of success, and then they will most probably be able to issue new stocks at a very high price, so there will be practically no dilution. Case B is the failure case, and then the stock might have a much lower price. Let us take a simple example: Let us suppose that they issue the new stocks at a price of $10. In this case they have to sell another 12 million stocks, so the dilution is about 2:1.

To: glen who wrote (99)	7/18/1999 5:00:00 AM
From: Manfred Sondermann	Read Replies (2) \| Respond to of 250

>I have heard that Paul Allen and Bill Gates >took over 1 million shares of the IPO, diminishing the float even >more. [...]. Gee, Manfred, don't you think their experts read all >of the research that's available before putting Gates' and Allen >in VXGN? I would not pay TOO much credit in the fact that Gates and Allen bought some stocks. One million stocks cost in the IPO $13 million. For them this is peanuts, and when they loose it they would not even notice it! You think their experts are doing a good job! Let us take Bill Gates as an example. Gates has invested in a lot of biotech stocks, among them Ligand and ICOS. As far as I know LGND did not have the big breakthrough until now, and with ICOS Gates had LUCK! Because ICOS found a functionality of one of their existing drugs as as an impotence drug BY ACCIDENT, (I forgot the name of this drug) long after Gates came in. This impotence drug was prior designed as a drug for heart attacks, and failed. Out of the 4 big drugs in their pipeline, practically only one had success, and I repeat: by accident. In this company Gates is even in the board of management, as a director, but he almost never attends the director meetings. And despite the fact that Gates is on board, this could not prevent the stock to fall from $20 in 1992 down to $3.5 in 1995.

To: glen who wrote (99)	7/18/1999 5:06:00 AM
From: Manfred Sondermann	Read Replies (2) \| Respond to of 250

>I think VaxGen's share price will trade well above $50 before >year's end. I do not have any opinion where the stock will trade before the FDA approval, because I think this stock will be highly volatile before the approval. However, let us make some very rough long term estimates in the BEST CASE of FDA success: Assumptions: -best case scenario: 30 per cent efficiency is found in 2001. -there may be then about 15 million VXGN stocks. -GPSite is right with his $85 billion market. -the French competition in the long run may also take perhaps half of the cake, despite being two years behind. -there will be a worldwide vaccination all over the world for about seven years, till most of the worlds population is vaccinated. -VXGN, as such a sexy stock, might trade with a P/E of 35, long after AIDSVAX is on the market. Then this stock might trade at $3800: "Proof": From $85 billions AIDSVAX gets the half: $42.5 billions. Now you can read in the prospectus that in the States Vaxgen gets 30 per cent of the revenue and Genentech 70%. In the rest of the world it is just opposite: VXGN gets 70% and Genentech gets 30% of the revenues. So let us assume that in total VXGN gets 55% of the revenue worldwide, that is $23.4 billions. Divided by the duration of vaccination, (7 years assumed), so VXGN has an annual revenue of $3.3 billions. Take away from it the costs of the company and the taxes, then there might be left the half of it: an earnings of $1.65 billions each year, or $110 per share. (15 million shares assumed). With a P/E of 35 the stock price will be $3850 in about 7 or 10 years. But dont forget that this is the best case scenario that could happen. I think this is very unlikely.

To: glen who wrote (99)	7/18/1999 5:13:00 AM
From: Manfred Sondermann	Respond to of 250

>I do think you are doing a great job with your research >and bringing it to this thread is very much appreciated by me, >and I am sure by others. Thanks. But to be sincere I have to admit that a big amount of this research has been done by a friend (Jochen Jansen, he has a "Research Master Degree", greetings! :) ) In most of the threads here in SI people only do onesided discussions. But I think, on the long run, it is more fruitfull (even for the stock!) if everyone reads a lot of pro and contras. And I hope some other interested people will join this discussions, maybe after the "quiet period", when Prudential and Lehman might make more advertisement for VXGN. >I believe there is an excellent chance AIDSVAX will achieve >a 30% efficacy level by 2001, and maybe sooner. > VaxGen is much closer to completing this phase of the >project than you are probably imagining. Your word in Gods ear! smile. Have a nice weekend!