As a TC client, I bought in to PRR (for the first time) with...

As a TC client, I bought in to PRR (for the first time) with their last 5c capital raising. I also had small holding through etrade, and traded the stock a few times on its spikes. I sold my TC holding progressively for an average price of 6.2c. Because of the company's minimal cash reserves and thin pipeline, PPR has for me only ever been a trading class biotech, not investment class. I was always quick to lock in profits.

I haven't touched PRR for a few months now, but continue to sniff around. Given the stock's current market cap, it has the potential to spike 200% in a day if a non-dilutive funding source emerges. I see two potential non-dilutive funding sources in the near term:
(1) Given the strength of phase IIa, a $3.5mill AusIndustry grant is not unrealistic.

(2) The sale of its $3.5-$5mill stake in Trillium.

The influx of cash from one (or both) of these potential sources will see massive buying in PRR because punters will recognise that Phase IIb/III will be able to go ahead without giving away the company. And with a SP north of 8c, PRR will also be in a position to conduct a modest $2-3mill capital raising (probably a rights issue, fully underwritten by TC, with an option sweetner). PRR only needs around $8mill to fund Phase IIb/III in Aust.

However, the risks associated with PRR should not be underestimated. PRR's CEO was not speaking accuratey when he recently said "the Dendreon announcement, in our view, provides no justification for a sharp drop in the value of Prima's securities." Of course the Dendreon announcement is going to justify a drop in PRR's share price because the absence of Provenge on the market over the next couple of years means that the cell therapy space will not be commercially validated for some time. This has the follow on effect of making potential investors/funders of future CVac trials all the more cautious. (If CVac was a MAb (a commercially validated technology), investors would be falling over themselves to fund phase IIb on the basis of the solid phase IIa results).

There is also an even chance that no non-dilutive funding source will emerge for PRR. This will leave PRR's CEO with three main options, none of which are particularly attractive. First, he could allow PRR to be merged with a cashed up biotech. Unfortunately, few Aust biotechs have an interest in cell therapy, so PRR would probably have to go overseas (perhaps Dendreon??). Either way, given the absence of PRR cash and its tiny market cap, existing shareholders would be unlikely to see much upside in a merger, at least over the medium term. Second, he could privatise PRR (with the Burnet Institute as a minority holder). This move would probably benefit him, but at the expense of other shareholders. Being the likely only bidder, an independant valuer would likely conclude that a 1.5-2c per share sale is "unfair but reasonable under the circumstances." Third, he could simply sell PRR's two main assets and return the cash to shareholders. This last option may not be as bad as it sounds. Even a fire sale of Trillium and CVac would likely generate around $6mill, so shareholders buying at current levels might even see a small gain.

Whatever option PRR's CEO takes, he needs to move very quickly. Time is running out.

I'm personally staying clear of PRR at the moment (my focus is small cap technology and renewable energy), but if I sense that a non-dilutive funding source has a high chance of emerging (I have my ear to the ground for credible rumours), then I will start accumulating: It is worth taking a risk or two for a potential rapid fire 200% gain.