PropThink: PPHM's Clandestine Capital Raise Provides Great Exit Opportunity; Sell Into Strength
(Thomson Reuters ONE) -
By David Moskowitz
In a move of self-preservation, Peregrine Pharmaceuticals (NASDAQ:PPHM)
announced Wednesday that it raised $14.3 million in gross proceeds through an
ATM (At The Market) agreement with MLV & Co. We find it interesting that the
company reported "gross" proceeds and not "net" proceeds, once again
demonstrating a lack of complete transparency with investors. Until the company
actually reports what net proceeds were, we will assume a 6% fee for the ATM
services provided by MLV, hence net proceeds estimated at $13.4 million.
According to the company's press release, the additional financing extends the
ability to fund operations by 2 quarters. So while the press release highlights
the company's contract manufacturing business, Avid Bioservices, as an integral
part of PPHM's strategy, and cites what looks like reasonable revenues,
management also stated that, "Based on current financial projections for ongoing
clinical trials and operations including cash inflows under signed contracts
with Avid's existing customers, and assuming the company does not receive
additional proceeds from other potential sources of capital, this funding should
provide the company with sufficient capital to reach potential upcoming clinical
and development milestones through the third quarter of calendar year 2013."
An investment in PPHM, now more than ever, relies on the company being crystal
clear with investors, particularly given the prior hype on "great" bavituximab
data that turned out to be bogus. We do not believe the capital raise announced
today changes the story for the better, and in fact, suggests that the company
could continue to sell shares to stay alive while no one is looking. Hence, more
pressure on the stock. After PPHM fully reflects the additional two quarters of
cash that the ATM has brought in (calculates to an additional $0.13 per share
that of course will be used), we believe investors that were holding on to PPHM
for a bounce now have an opportunity to cash out of their PPHM at much better
prices. Expect shares to weaken after this morning's initial bounce, with a
NASDAQ de-listing still an overhang should the shares remain below $1.00.
Click here to read this article at PropThink.com, or here to see PropThink's
previous coverage of PPHM.
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Datum: 17.10.2012 - 15:14 Uhr
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News-ID 193405
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