Thoughts concerning the cancelation of plans to build a new research facility in Ohio.......
biz.yahoo.com
Most of the *profitable* assets of this company are very portable. Adcon manufacturing is currently done on a contractual basis in Europe. Plans are to bring it to the U.S., but they are scheduled for a small, leased facility.
I feel that one of two scenarios is unfolding...... (1) an underwriter has finally gotten under their skin and made an offer that can't be refused, given the constraint that Boston is back in the plan, or (2) the company is about to be munched.
Thinking about a munch.... profitable after one (two?) full quarter(s?) of U.S. sales on modest but rapid penetration, near-term revenue potential from multiple directions (increased -L penetration in the U.S., marketing partner for -P, -L in Japan, new distributor in Europe, potential reimbursement from France, upfront for GT-2331, milestones from Janssen for Alzheimer's), an advanced program in H3 antagonists/agonists of their very own (addressing large markets), and a point-blank aim on one of the most interesting areas of Alzheimer's research (with Janssen, candidate molecules identified but no lead selected).
Plenty of current assets...... $3/share and going up.
NeXstar, that just got munched for $550, had sales last quarter totaling $31 million. GLIA achieved product revenues of $7 million last quarter, up from $0.5 million in the same quarter of '97. I don't remember when NeXstar started selling product, but I know that it was when the "star" stood for Vestar, the merger partner with NexaGen. So..... it's been awhile, wading through a lot of tough competition and slow penetration. GLIA, on the other hand, is achieving rapid penetration, and conducting pivotal trials with -P, which addresses a market approximately 3X that of -L.
We've seen with NXCO and NXTR that accretive munches are first on everyone's list. GLIA is going to go, IMO.
Anyone remember what NXCO went for?
Here's a post on the subject from Pnutgalre of Yahoo......
In re-reading posts 1027 and 1028 (press release on the building announcement) I am puzzled by the
cancellation announcement. If a "development" is rushed into by someone with little prior experience, there
are going to be major surprises ahead. The demands and costs of local govt., the lists of
regulations/specifications/requirements, the rules and regs. of D.E.R., etc., have been more than enough to
shelve many strong projects. But, I cannot imagine that Glia's management team is new to this process. I'm
sure that at least some of them have seen it all before. Plus, this was no rush job. According to the article,
there were two years of competitive talks with Ohio, North Carolina, and Massachusetts.
The groups that were involved in the negotiations also would seem to have been some assurance against
major roadblock surprises---Cleveland's Biotech Marketing leaders, Chagrin Technology Park Developers,
Cuyahoga County Development officials, a local representative of the Governor, and others. The deal even
included a large loan from Cuyahoga County. Apparently both Glia and Jacobs' (the technology park
developer) were were represented by the same guy--Hal Ehretsman, a commercial real estate consultant.
They were all excited. Glia was going to be the "anchor" for the 630 acre park and for biotech in NE Ohio.
Admittedly, its got a lot of press release hubba bubba, but I'd be surprised if it got axed because of core
borings, storm drains or a detention pond.
If I'm looking ten years down the road, a new facility like this paves the way for Glia to continue building Glia.
But, say a new wrinkle appears, and for some reason minds change, and the business plan is adjusted. Say
for some reason, they now are focused on a one or two year horizon and want to maximize value and
strength as quickly as possible. The expenses and distractions of a huge facility are no longer so appealing.
(This might also explain why the Plain Dealer isn't giving Glia much coverage. Some of their upper echelon are
probably committee members on some of the boards supporting the Park's development)
My guess is that Glia has had a few wild cards added to its deck and they have reshuffled. I liked the news of
the Phase I completion, but I think we are going to see bigger cards played in the next 6 months. The Galre |
