Why didn't the directors strike a better deal for shareholders in the recent capital raising? I don't think the answer is a lack of resolve or inexperience in the capital markets.
The negotiations for the recent announcement were conducted with life science and sophisticated investors in early March. There were key investors seriously interested in joining the register - the only issue was price. Phylogica management had issued a slew of positive announcements - Frost & Sullivan Award, Bioshares top pick, the successful collaboration with Roche, new drug potential in TBI, the Phenomica announcement - the share price had advanced from 4c+ to 8c. Right at the critical juncture of negotiations and much to the chagrin of directors, selling began to cap the share price advance until weight of selling sent the price back to 6c+.
Why did we end up with a deal less favorable to current shareholders? If we want to apportion blame, a big chunk of it rests with our timid capital markets. The frustration of investing in Australian junior resource and biotech stocks can sometimes bring one to tears.
Nonetheless, the interview on FNN with Woolf explains the key reasoning behind the strategy to raise funds at this juncture. We move into an exciting year of development which will overshadow any disappointment over dilution.
PYC Price at posting:
6.5¢ Sentiment: Buy Disclosure: Held
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