Why switch to Advicor when you can take niaspan along with a superior statin, lipitor? Convenience of one pill?
I think the company has done a remarkable and not trivial job of essentially introducing niacin as an anticholesterol agent.
I took a quick look at their sec filings to see what the implications were from their ongoing and growing "loan" from their Chairman and founder. The founder, Michael Jaharis, essentially loaned kosp their burn rate while the company got niaspan off the ground:
Certain Relationships and Related-Party Transactions
On July 1, 1998, the Company entered into a $30-million credit facility (the "Credit Facility") with Michael Jaharis, the Company's Chairman and its principal shareholder. On June 9, 2000, in order to reduce interest costs, the Company utilized the proceeds of a $20-million equity contribution from DuPont Pharmaceuticals Company to pay-off borrowings made under the Credit Facility. In
connection with this loan repayment, Mr. Jaharis agreed to continue to make available to the Company the full original borrowing capacity of the Credit Facility, provided that future Company borrowings from Mr. Jaharis be first made
from the existing borrowing capacity of Mr. Jaharis' other credit lines with Kos. All other terms of the Credit Facility remain in full force and effect. Borrowings under the Credit Facility, which totaled $10 million at December 31, 2000, bear interest at the prime rate (9.5% as of December 31, 2000), and are due December 31, 2002.
On September 1, 1999, the Company formally agreed to the terms of an additional $50-million funding arrangement initially committed to by Mr. Jaharis on October 7, 1998 (the "Supplemental Credit Facility"). Borrowings under the
Supplemental Credit Facility totaled $50 million as of December 31, 2000, bear interest at the prime rate, are convertible (at $4.91 per share) into shares of the Company's Common Stock, and will be due December 31, 2003.
On December 21, 1999, Mr. Jaharis agreed to extend another $50 million loan to the Company (the "Standby Facility"). Borrowings made under the Standby Facility totaled $12 million as of December 31, 2000, are due June 30, 2005, and are also subject to most of the terms and conditions of borrowings made under the Supplemental Credit Facility. Borrowings made under the Standby Facility are
not, however, convertible into shares of the Company's Common Stock. In lieu of a conversion feature, the Company granted to Mr. Jaharis non-detachable warrants to purchase up to 6,000,000 shares of the Company's Common Stock at $5.00 per share, which approximates the market value of the Company's Common Stock on the effective date of the Standby Facility. The warrants are exercisable at any time until June 30, 2006.
Another interesting tidbit. I don't understand why these shares aren't included in the wtd avg shares outstanding (it's about 20M shares!).....
3. NET LOSS PER SHARE
Basic loss per share is determined by dividing the Company's net loss by the weighted average number of shares of Common Stock outstanding. Diluted loss per share also includes dilutive Common Stock equivalents outstanding after applying the "treasury stock" method. The Company's basic and diluted earnings per share are the same, because the Company's Common Stock equivalents are antidilutive.
****The following Common Stock equivalents have been excluded from the calculation of weighted average shares outstanding****:
SEPTEMBER 30,
------------------------------
2001 2000
------------ ------------
(in thousands)
<S> <C> <C> <C>
Stock options outstanding............................................. 4,665 3,771
Convertible debt ($50 million at $4.91
per share - See Note 6)............................................ 10,183 10,183
Non-detachable warrants (at $5.00
per share - See Note 6)............................................ 6,000 2,400
------- ------
Total........................................................... 20,848 16,354
======= ======
So, unless I'm reading this wrong, Jaharis has himself an enormously valuable amount of warrants and the diluted share count would be more like 40M not 20M shares outstanding. Am I reading this right? |
