Hi all,I'd lean towards a placement to an...

Hi all,

I'd lean towards a placement to an institution/sophisticated investor, with perhaps a rights issue/SPP just to keep faith with existing holders.

I don't think the company is looking to sign a partner for the Phase 2/3 Oxy trials at this stage. I'm sure I remember reading something like they 'wanted to take it as far as possible under their own steam', but of course I can't find it just now. The rationale being we will get a bigger deal later as the project will be further de-risked.

I think it's important to realise that returns to existing s/holders will get diluted whichever way they go. They either issue more shares now in exchange for cash, or take an upfront from a partner now which means the partner gets a larger slice of the pie down the track. The board's job is to work out which is best in the long run.

Our existing cards are very hard to read (at least for me) in terms of short term significant cashflow:

Novartis - I doubt we are looking at a sufficiently large enough upfront to cover Oxy,

Vitamin D - who knows?

Cellulite - serious cash flow is probably a way off, remembering the 1H launch is Australia (an in-house job), and we don't get to the Rest of the World launch until 2H. Possible upfront there,

Mastitis - Whichever of the numerous figures that have been mentioned over the past days you pick, once again we are launching Aust & NZ first, with small $ involved at least initially. RofW could involve a decent upfront, but at this stage we are still looking for a partner, so I don't see a quick fix there,

Phusion - we haven't heard boo on that one for quite a while; they may be ready to roll out something next weeek for all we know, but ProPhase would need to recoup their $0.5M initial capital and up to $2M dev & mktg money before we see any profits come our way,

Psoriasis - We are due to 'enter the clinic later this year', so I don't see any quick $ there,

CSL - An interesting one for mine. The Nov newsletter graph seemed to show that the R&D phase had been completed, so does that mean we are waiting on a yay or nay from CSL? Huge, world leading company with massive markets. From memory the terms of CSL taking up the option on this were signed off in the original agreement. Possible big up-fronts involved here. Of course, they may say no, and we get nothing.

I don't think the company looking for/needing capital should be seen as any failure at this stage - it's just the nature of the beast. I doubt there's a junior biotech around that could morph from research house to being in the market place in $B global pharmaceutical markets, without a series of cash injections. Mind you, the argument that they've let it get a bit close to the wire could be valid.

Certainly interesting times - never a dull moment with our POH.

Regards