http://www.asx.com.au/asxpdf/20070912/pdf/314hpl5w2zvfqj.pdfMy...

http://www.asx.com.au/asxpdf/20070912/pdf/314hpl5w2zvfqj.pdf

My earlier thoughts were
“From the last 3B I see 151.5M quoted shares and another 51M possible shares from warrants and options, some of which PBT will be paid for and some are nil consideration. Let’s call it 200M shares plus they probably need 20M in funds (WAG) to get through to the end of 11a study. I’ll add 70M shares for that, which may be on the low side, as any investor would probably want some warrants tossed in. “

They have raised $7M and will issue 24.56M more shares with 8.2M attached options.
The price paid per share of $0.285 is most easily considered the new diluted price, if I wasn’t so lazy and didn’t consider the options immaterial I’d run them through an options pricing spreadsheet to calculate their value.

Raising $7M instead of my WAG $20M is good. This reduces the dilution I was expecting. If PBT2 is found to successfully meet its end points then the options will be exercised and the share count will be around 233M shares.

Everything with this investment hinges on PBT2, if IIa study is a success the share price should get to $4 and possibly if people get giddy as high as $7.

I really don’t care strongly about dilution at this point and if restricting the raising to $7M was a purposeful decision then I applaud it.

Now if only I could sell my shares today and be offered the opportunity to buy the new issue with attached options instead.

The next big question is if PBT2 IIa study is successful then what could happen?
1. Company is bought out by US pharma or biotech. There have been numerous purchases by large pharma and biotech lately to allow a diligent investor to come up with a rough price tag for Prana. My rough ball park is $1-2B, but I don’t know how much Intellectual Property or how many molecules they have.
2. Sell PBT2. I like this option, but would probably get in trouble if I expressed my views why. I do not see this as the best move for investors as the price tag would be less and the remaining company one again becomes a very questionable bet. If this occurs I would be looking to sell my holding.
3. Develop PBT2 internally with financial assistance from a strong pharma/bio.

Of these alternatives, selling Prana lock stock and barrel is my preferred outcome.