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Biotech / Medical : ARIAD Pharmaceuticals -- Ignore unavailable to you. Want to Upgrade?

To: John Dwyer who wrote (626)	8/9/1999 3:37:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 4474

As of the date of the Proxy (end of May) there had been no conversions of the Preferred. This likely means that there was no shorting by them prior to the beginning of May. Thus any decline in the stock price prior to this date wasn't cause by the Preferred Holders. (Preferred holders will generally short just prior to converting, because that way they are guaranteed a return no matter what the sock price does). BTW, people shouldn't assume that the Preferred Holders are somehow out to destroy the company - they will in fact do better if the company does well. Unfortunately, sometimes they do destroy companies in the process of getting their money out. Generally, stocks with toxic converts do very badly, but it is hard to figure out how much of this is due to the converts and how much is due to the fact that companies usually only do these deals when they can't get straight financing, and thus are in a bad way to begin with. For an example of a biotech company which has what amounts to a toxic and whose stock price has done just fine of late, you need look only to Xoma. ARIA is a puzzling case. My guess is that if they had looked hard enough, they could have come up with some institutions that would have purchased common at a moderate (say 15%) discount. If management is looking for a way to redeem itself, an announcement that they aren't selling any more of the convertible would be an excellent place to start. Peter

To: John Dwyer who wrote (626)	8/9/1999 4:34:00 PM
From: LLCF	Respond to of 4474

<, I wonder how they would let themselves get raped like this. It just doesn't fit...> Because they just didn't get it... you need 6 Philly lawyers and 2 CSFB investment bankers to tell you what it means. Ariad certainly didn't dream this deal up, it was presented to them. Look at how the deal reads, these guys have millions of shares to short and are protected, and the lower it goes, the more they can sell. They can bash it down to 1/2 and take --- 10 MILLION SHARES -- for each 5,000 preferreds they own the was I read it!!!!!!! Of course they'll be short at higher levels probably covering a good portion of their purchase price. DAK