I'm just not understanding the tactics being used by EchoIQ at this point.
- They announced their heart failure study results last Monday.
- then without any new product information being released they announced last Wednesday they were going to raise some capital.
- and only a day later - normally these things take at least a couple of days so obviously a very positive response from institutions - they tell the market they had already secured firm commitments from institutional investors for a gross $7.1m in new funds, at 15 cents a pop (a very small discount). The market price immediately jumps up to around 18 cents (and above) which is where it sits as I type this. The new scrip will begin trading this coming Friday, 13 September. Going on what I have seen recently this is a very strong outcome for a company that is pre-revenue and not licensed.
- and now they announce that on this coming Thursday, 12 September, the day before the new shares start trading, they are going to give an update on "the Company’s presentation of groundbreaking study results atthe world’s largest cardiology congress in London, UKand on additional details to be provided around Company’s regulatory andcommercialisation pathways".
What I am not sure about is whether having the update the day before the new shares begin to trade is intended as a defensive move or more them using the cap raise as an inflection point with their future starting now.
By defensive I mean that the most likely thing that will happen on Friday is that at least some of the institutions that picked up shares at 15 cents will take stag profits by immediately dumping those shares back into the market: easy money for the institutions but it likely means that the share price will end up a fair bit lower than it was before the cap raise. Under this scenario the presentation on Thursday could be the company hoping to encourage enough retail investors to buy shares so as to add some starch to the share price while the institutions take their stag profits so as to lessen how much the share price drops.
The alternative thinking might be that the institutions participated in the cap raising on the expectation that with the heart failure study results and with the imminent FDA tick for the heart valve technology EchoIQ has been moved onto the launchpad. The presentation by EchoIQ will be them delivering on that expectation, with the company's COO and Prof Strange laying out in explicit terms the near term pathway ahead towards commercial success. In this scenario the presentation will not be aimed at asking retail investors to ignore the institutions pushing the share price down. Rather in this scenario the presentation will be aimed at the institutional investors, asking them not to take their stag profits but rather to hang around and enjoy the ride that is only now getting underway.
In the first scenario, above, I would wait before buying any more EIQ shares, at least until the institutions had finished their selling. In the second scenario however I would look to buy a few more shares now, before Thursday's presentation which will lay out the way ahead for EchoIQ. On balance, where I am at the moment is I think that this bear market sucks so badly that not only bad news is treated as bad news but good news is viewed as even worse news. So whatever the company says at Thursday's presentation the EIQ share price is heading down as soon as the institutions can start selling their new shares.
Either way, in the next couple of weeks we should have a better idea of what is ahead for EchoIQ. Excellent new information from butcherano about the reimbursement environment EchoIQ will face even with Federal Drug Administration's clearance. Hopefully that will be something that EchoIQ has to work on in the near term.
(20min delay)