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Biotech / Medical : Techniclone (TCLN) -- Ignore unavailable to you. Want to Upgrade?

To: EPS who wrote (2645)	10/18/1998 3:48:00 PM
From: The Dodgy Ticker	Respond to of 3702

Exactly! So all a reverse split would be good for would be to decrease the size of the float of stock shares and perhaps increase the volatility of its price. I'm beginning to think that the only time a reverse split could be beneficial is for a company which already has earnings, and if it does, it probably won't need one! Regards, Bob

To: EPS who wrote (2645)	10/18/1998 4:38:00 PM
From: Maurice Winn	Read Replies (3) \| Respond to of 3702

*Warning, Reverse Split post* Victor, I've been to Salamanca and didn't see any natural otorgas. You sure that's a good translation? Re the past few points: 1 A single example is meaningless. Just like a single clinical result in cancer treatment is meaningless in the absence of a causal relationship. IISLF and TSRG are apparently worth nothing. Reducing the number of shares to one will do nothing if the company is not sound. Reverse splits don't add fundamental value, they simply bring the stock price into compliance with various listing and institutional expectations while reducing the take that brokers get. That's all. If you think TCLN is unsound - sell. If you think it sound, add liquidity by reducing the shares outstanding - which will seem paradoxical to some, but liqidity derives from the number of interested buyers. As everyone seems to agree, there are fewer with real money in the penny stock range. 2 You said: "If you think that money managers are going to be jumping up and down to buy a newly reverse splited issue which has the same pre reverse split fundamentals then you believe in magic." Not jump up and down, but all seem to agree that there is a magical $5 figure below which many will not deal. For example, the magic of margins stops at $5. Institutional investors stop at $5. Nasdaq listing has a magical $1 figure. Brokers have a magical 3cents per share trading price [more or less] irrespective of the share value, so a person buying or selling hands a lot more to the broker for a lower priced share. All that stuff. These are the magical numbers which others arbitrarily set which TCLN must comply with or suffer reduced value. It is very true that the value which matters in the end is the value patients put on the products, but there are a few years to go before those dollars flow in. Until then, money raised and existing shareholder dilution is a function of the share price. A low share price means more dilution. It is reduced because of those 10 factors. 3 The downside is to zero. Whether the stock is $1 or $100, the downside is identical. A reverse split does not increase the downside risk. If the stock goes bust, zero is the number. As you have seen lately, the volatility is huge. Up to $2 a week or three ago, down to 68 cents a week ago. The volatility would reduce with more liquidity = more buyers and sellers interested in the stock. The downside risk stems from lack of progress to goals by the company. If they are doing a good job and the clinical ideas are sound, the company is fine [but low priced with more dilution likely]. If they are not, bail out and leave somebody else holding the bag. It looks sound enough to me. The P:E is irrelevant to TCLN because it doesn't have an E. 4. I don't understand: "It the prize of the stock cannot be maintained at a price bigger than one with no earnings, why would it be possible to maintain it at a prize bigger than 5 with no earnings? " I think the answer is that future earnings are what matters and people estimate what the future earnings are worth today. All a bit of a guess, so there is bound to be disagreement and volatility in the stock price [prize?]. 5 Not a circular argument. The problem acknowledged by a reverse split is the need to comply with arbitrary numbers set by Nasdaq, brokers, margin rules, institutions. A bit like Millennial celebrations are based on an artificial idea. A year doesn't really have any start or stop and the earth has done untold millions of orbits around Sol. But if people set some arbitrary date for compliance with their annual rules, then you just have to adapt to their rules. Or suffer the consequences. Or change the rules if you can. Look at the consequences of the arbitrary date Y2K. You just have to comply. The reverse split argument does not relate to the fundamentals of the company. Other than possibly the ability to raise money, but even that should be possible at low values, with more dilution of exisiting shareholders than would be necessary at a more popular price. I persist with the idea because it seems to be good for Techniclone, which is one of the few hopes for major progress in B-cell lymphoma treatment and the wide range of cancers which might be subject to TNT. Not to mention VTA etc. TCLN has got a while to go before they are selling stuff. Nobody liked the recent 68c price due to a 700,000 share margin call, which might have been unnecessary if the stock had been over $5 and therefore marginable. It all distracts from the real business of fundamentals. [Well, of course the buyers liked the 68cents and maybe the new shareholders will create value better than the old ones - heck, they might even vote for a reverse split.] Maurice