I think sassy had a feeling about where I might be coming from.
Perhaps you might like to consider the following.
The total return of a company is made up of dividend and share price capital appreciation. So, all things being equal (which they are often not), the capital gain will be less if there is a dividend.
If the option is "in the money" before any buy back, then it is equivalent to owning a share (as you have shown).
However, management should be rewarded with options that are priced at a significant hurdle above the current price.
So a buy back may result in the share price exceeding the exercise price, whilst a dividend return may not. Very different rewards for shareholders and option holders.
Just to show how schizophrenic I am, I do agree with mw that a one off dividend would probably do little (in the long term) for the share price. However, whilst a buy back may not see the expected result in the short term, presumably in the long term it should. Would be nice to see Biota move beyond the "speculative" tag and become a "real" company.
As an alternative, or in conjunction with buy back/dividend, it may be worthwhile for BTA to be looking around for undervalued BIO companies to take over. The long term viability of BTA would be helped if it had more products in the pipeline, so the occasional product failure would not be fatal (until recently Relenza was considered a failure - at least by GSK).
With respect to LANI royalties, I suspect that the deal may have been done a long time ago (when Biota was in a weaker position than when negotiating Relenza royalties). I would not be setting up for manufacturing if royalties had not bee sorted out.
BTA Price at posting:
$1.88 Sentiment: None Disclosure: Held
