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

To: Jongmans who wrote (473)	2/7/1999 5:55:00 PM
From: Biomaven	Respond to of 4474

Martin, I agree that based on the 8-K the conversion is at 100%, which does to some extent mitigate the effect of the floorless. The bad news is that there are at least 2 tranches, totalling $10m, with the possibility of further tranches down the road. The second tranche should be announced soon. I agree with John that the investors have the incentive to short the stock to push down the price in the 21 days before they convert. However, they do not have to do this right now - they can wait until a time of their choosing. The agreement (which is ridiculously complicated for a deal of this size) doesn't explicitly prohibit shorting. Doesn't mean that they will do this - indeed I doubt they want to risk the stock ending up on the BB. However, if they ever want to exit their investment (or part of it), they have every incentive to do so by shorting in the 21 days before conversion so as to guarantee they come out at least somewhat ahead. If they convert and then sell, who knows what sort of price they would end up getting for their shares. Peter

To: Jongmans who wrote (473)	2/7/1999 6:28:00 PM
From: Dr. John M. de Castro	Respond to of 4474

Martin, I stand corrected, the agreement does not exempt the HMR investment. However, HMR bought $5.7 million biz.yahoo.com and the agreement requires that $7 million be bought before the 100% figure becomes appropriate. Here is the relevent paragraph from the 8K. I still hold that 90% is the correct percentage. Best regards John de C (iv) "CONVERSION PERCENTAGE" means (A) with respect to any Conversion Date prior to February 15, 1999, 100% and (B) with respect to any Conversion Date on or after February 15, 1999 (I) if the Company consummates one or more corporate collaborations or strategic partnerships during the period beginning on October 18, 1998 and ending on and including February 14, 1999 which provides the Company during such period with an aggregate of more than $7,000,000 of revenue and/or net proceeds from equity investments or the issuance of Qualified Subordinated Debt (as defined below) (including, without limitation, amounts received by the Company from Hoechst Marion Roussel ("HMR") pursuant to any agreement entered into prior to the Initial Issuance Date and any amendments thereto)(collectively, a "QUALIFYING FINANCING"), 100% and (II) if the Company fails to consummate a Qualifying Financing during the period beginning on the Initial Issuance Date and ending on and including February 14, 1999, 90%, each subject to adjustment as provided herein.