Ann: Orthocell Receives First US CelGro Product Approval, page-175

Apologies if my speculation is incorrect...but i suspect that hitting new highs may have prompted a wave of optionholder or warrant selling. If you have held these instruments for a long period of time you might feel a little nervous of not having another “liquidity event” such as an FDA approval, to spur more buying interest in the stock short term to absorb your selling interest. Alternatively, you might wish to sell ordinary stock with a view to exercising the option, short against it, or if you had a very large position,even seek to hold down the price to stop dilution ( i doubt if the latter is likely for a number of reasons).

The plain fact is that if market conditions materially change, or there is no news flow in the next four months, a lot of options will expire or be forfeited , particularly those up at 58cents . Indeed , it will probably not have been overlooked by the holders of 9.63m options at 25 cents, that the option holders with strike prices of 58 cents, would have potentially large volumes to sell if the price ran up to all time highs.

Having commented on the above ...it does not bother me.....it may be a tiresome feature of ASX quote small cap that warrants and options are too often issued without proper regard to their dilutive effect, but the relatively near term expiry dates has helped me understand why I was able to pick up my required holding without have to pay a deserved premium for FDA approval. Never look a “gift horse in the mouth” as they say . I guess many short term traders have been sucked out as the stock turned South, but IF I am right, the shares might outperform, when either the supply runs out, or after 8th May when the latest exercise date “overhang” is exercised or forfeited.

In view of the substantial trading volumes on the two days subsequent to the FDA announcement I feel there is a decent chance that a big chunk of the positions have washed through.....but that is just a complete guess. When the next return is made by the company we should keep a careful eye on the number of shares issued to see if this has been a factor. I doubt the Company mind too much as the additional funds received from the exercising of options or warrants will add to the coffers. I hope as the business matures it will not continue to use these dilutive instruments as analysts will always prefer to show full diluted calculations which hold back valuations unnecessarily i feel. Equity issues should be always done at arms length valuation and many companies do not achieve a proper valuation when issuing derivative instruments just out of the money. Professional investors notice these things and generally speaking frown on them.





Please do not rely on the accuracy of any facts or opinions expressed in the above post when making an investment decision. OP