Thanks writer, you sure do live up to your name.
To say I was disappointed would be an understatement, although in my prior post, day before yesterday, I half expected it. So as promised I bought some more at an average cost of $2.75 though the use of out of the money puts.
I believe the floor is $2.70 and I half expected to hear bad news, especially as the selling into the earnings release seemed to indicate that the leaked info would be perceived negatively by the market. If it drops to my expected low I will buy more. This has always been a 3 year stock and if I was a betting man I would accept a bet that this stock will be at least a triple in 3 years. Since I am not a betting man (an oxymoron), since I am betting on this stock with loads of money, it is in the top 5 of my investment portfolio and constitutes close to 20% of my liquid net worth.
Then why was I disappointed? I wasn't so much with the announcement as I was psychologically ready for bad news, I wasn't disappointed with the canned presentation as they threw in quite a lot of hints, but I was disappointed with the analysts. These are guys who have recommended the stock but nobody except for Danielle took the time to ask pointed questions. It was as if they didn't care or had inside information. The one blunt question I would have liked asked was, "Do you have enough money to not have to issue additional stock and hence additional dilution?"
Danielle asked the following questions:
So I think you said last quarter that commercial shipments had commenced, but sales actually came in lower on a sequential basis.
The response was until we have consistent commercial sales i.e. until essentially 2016 we will be unable to show increasing sales
And to follow-up on that from a cash burn perspective, you guys did a raise and with the raise, I think you had about $54 or $55 million, but only $37 million now is at the end of the March quarter. So could you talk a little bit about how to think about cash burn going forward and the potential need to go back to the markets for more cash.
In other words you are burning a lot of cash, what assurances can you give us you won't run out of money?
David's response was : Yes so we're responsible Danielle to run the company with adequate levels of capital and as I mentioned in my prepared remarks and as we mentioned in the Q&A, we're confident that the cash generation capability of the company over time is significant.
But he didn't answer the question whether they would have to go back to the market for additional funding. Therefore I wish she had followed up with the blunt question: I know over time you will be cash flow positive but can you assurance us you have enough money to not have another round of funding. If they had answered yes to that question, I would have seen the stock spike up instead of spiking down.
Having said that I heard enough to want to buy more. If only I could buy it and forget it because 3 years from now I know this will be an incredible investment. For those of you who have watched this for 10 years I feel your pain, I own a couple of biotech companies that have made promise after promise but never delivered. Shortall for all his prior shortfalls is delivering this time around.
As usual just my 2 cents
UNS Price at posting:
63.5¢ Sentiment: Buy Disclosure: Held
