Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : XOMA. Bull or Bear? -- Ignore unavailable to you. Want to Upgrade?

To: schadenfreude who wrote (6738)	7/20/1998 4:56:00 PM
From: Bluegreen	Read Replies (1) \| Respond to of 17367

Don't you think you should be a little less myoptic and ask yourself who is going to buy all those shares? Shorting a stock to get more worthless shares? There is the BIG risk in driving the price down. Now the offshore entity has all those shares to sell. Good luck if it is a weak company to begin with. Once again someone HAS to pay you more money than you have in the shares in order to make a decent profit. It might look good when you are shorting and driving the price down but that is only HALF the battle. Now you have a beaten down the price and you want to magically unload your shares? Guess what that does to the price?

To: schadenfreude who wrote (6738)	7/20/1998 6:51:00 PM
From: aknahow	Respond to of 17367

Otaku, I am not a fan of this type of convertible, but even the article you mention in Forbes cites the fact that they can be used with less risk to the issuer if the contracts are structured properly. Visit the LGND thread or read Richard Harmon on the Biotechnology Value Fund thread and you will see that financing of biotechs is a major problem. Deals with large drug companies can be just as bad since the lions share of the profits goes to them and even worse is that owners seldom even are informed of the percentage of sales their company will receive. IMO this state of affairs may produce a takeover wave with the first to fall going at low prices. I actually think XOMA is in decent shape as it should be in a very strong position to make a marketing deal. Still fear a take over with the stock at these low levels. With the present capitalization the amount of common to be sold by the holders of the convert should not be excessively damaging. Also shorting by the holders is not a problem in itself. It is normal to sell against the shares they will receive. They short against the box. The key is limiting the amounts that can be sold or shorted each month. I do think there are a few other alternatives that can be used but really hard to think of more than one or two. However, remember that XOMA did raise $59 million in the last two years of which $30 was a c.v.p. deal with Genentech. This type of cash infusion has helped limit the amount of broker/dealer c.v.p. issuance required. XOMA should also know by Dec. if the P III trial was a success. If it is we will soon start to see at least minimal infusions of cash from sales from sales of Neuprex and continued cell expression licensing as well as the potential for HE license income.