Catching up on HC this morning and WOW is there an audition for...

Catching up on HC this morning and WOW is there an audition for a new Short Writer that I didn’t know about? I have never seen this much doom and gloom from so many posters. I want to share my perspective on a number of the general comments.

New Debt- I would much prefer new debt to additional shares being issued especially at these prices. The additional $10MM is also on top of the money available from the ATM or LPC. They only took down $3.6MM initially, they are being prudent and looking at cash needs and taking action on a very short term basis. They have to either pay the bills or halt operations.

Strategic Alternative – If you go back and listen to the last quarterly call and the Imperium launch I think it is pretty clear they are talking about providing access to, partnering/selling or licensing Imperium. This will raise enough money to see us through to significant production.

Salary Cuts – this is not a significant cost reduction to the company or impact to the affected managers, it is a symbolic gesture by management. The bulk of the cost savings $700K by years end is from the 20 employees that were laid off.

Company Takeover – I do not think the company will be sold, however if it is, it will not be at a premium in fact I would expect it to be a prepackaged bankruptcy where shareholders are wiped out and lenders take a haircut. This is how private equity would do it. AS and crew would come out very well in this case.

Cash Management – easy to say they have spent a lot of money, but without knowing what is/was going on you are second guessing without any basis. We have to trust the management.

Replacing Management and the Board – first of all it won’t happen. I have had my frustrations with the management and board, but I think they are doing a good job and they will pull of a strategic deal to put the company on firm footing.

Board Meetings – this is not an unusual situation in fact some lenders would put a representative on the board. The company is in a delicate situation and Orbimed has a vested interest in the outcome. Orbimed wants to know what is going on inside the company. The representatives are not board members and can’t vote they are only there to observe.

MS Negotiations – It does not take long to sell the company if that is your intent and you have interested buyers. These things happen very quickly on Wall Street. Which supports a more complicated deal to partner/sell or license Imperium. The language in the 8-K gives them leverage in negotiations. If your partner knew that your lender had a year end deadline with no flexibility or if you had promised the market you would make a deal by year end. You would be in a very weak position.

All this said if they don’t reach a strategic deal and raise cash in the next month or so we will all be toast.