Guys,
Just a couple of (rare) comments to add a different perspective on things, and spark constructive debate!
The capital raise has obviously generated a lot of heat. Whilst a much criticism directed at management historically has been justified (investor relations messaging comes immediately to mind), a lot of the current criticism isn’t warranted in my view.
I work for a small, cash-flow negative listed tech start-up. From my personal experience, you are only as good as your last raise, and markets are extraordinarily challenging for companies requiring capital.Whilst the last couple of weeks has seen a bounce in share markets, as recently as June capital markets were for all intensive purposes shut to small players (unless you were involved in Lithium!).Given current market volatility, extreme geo-political tensions, and rising inflation, I can fully understand management/board focus on getting a capital raise away – to my mind, it’s a matter of survival.I’ll also add that I’m thankful for the recent doubling in share price – whilst the raising at ~ $1.35 is disappointing, its considerably better than a sub $1 alternative.
I fully understand the view that management should have waited for the 008 readout.My response is that in these markets, a bird in hand is worth two in the bush.I can still remember when we finally won IND approval from the FDA: rather than spark a share price rally, it marked the commencement of a ~ 50% share price decline.We can’t predict the market’s response to 008 – but the recent share price rally certainly presented as an opportunistic moment for a CR.
A couple of other points.The 35% discount is bloody steep.I suspect that Bell Potter held the whip hand in negotiations with PAR. There is an underlying conflict between companies seeking capital, and their broker who firstly want to get the raise away with the minimum of work, and secondly, want to see a material increase in share price post raise, as it makes them look good.I suspect we (PAR) came of second best in our negotiations with Bell Potter.
The final point to make is that I don’t believe this raise is enough to get the company through to the end of Phase three.Despite what the company says, based on past form (ie missed expectations), I believe that NDA won’t come through until 2027. It is most likely they’ll need either another raise in 2024, or alternatively, they’ll (finally) achieve a marketing agreement in the second half of next year, post formal completion of 008, and post release of the dosing requirements of 002 (I’m discounting a likelihood of getting a material agreement on MPS).At least with this raise, we are in a stronger negotiating position with big pharma….
(20min delay)