Post by marriott on Nov 1, 2014 14:40:57 GMT
Generally, the law of supply and demand puts forward the idea that as the supply of something increases the value ( price ) tends to decrease.
When common shares are increased , the percentage of ownership of the company decreases . However,it does not necessarily follow that the value or the price of shares will decrease .
Obviously, what the company does with the money and how the market interprets those moves are crucial.
If the company issues the additional shares to pay off debt , pay legal fees , court judgments...etc and its future prospects are dim, then the raise will definitely result in dilution ( lessening of real value ) .
However, if the company uses the funds from the new shares to expand and upgrade its infrastructure, expand its R & D for specific products , and improve its work force for specific products or services, then
the raise will tend to viewed by intelligent investors as increasing the net asset value of the company.
Here is what Barclay A. Phillips - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer had to say during the last conference call :
"During the quarter, as Stan mentioned earlier, we significantly strengthened our balance sheet by raising net proceeds of $108 million in an underwritten public offering. As we discussed at the time, the new capital would enable the clinical development of the RSV vaccine candidate in the elderly indication, in parallel with our maternal vaccination and pediatric indications.
In addition, the new capital will be used for general corporate purposes, which include capital equipment investments necessary to meet the manufacturing demand of our planned and future clinical trials. "
Further during the question and answer period:
George B. Zavoico - MLV & Co LLC, Research Division
A question -- Buck, you mentioned something about manufacturing expansion from capital investments that need to be made. Because you’re -- in preparation for all these trials, you're going to be making a lot of vaccines and a lot of different vaccines. So what capacity do you have now, and what capacity do you need to add for the clinical trials? And then, will you need to add more for commercialization?
Barclay A. Phillips - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer
Yes, thanks for the question. I think it should be recognized that we're actually manufacturing a lot of products right now. As Stan said, we're starting a bunch of clinical trials here over the next number of months through the end of the year. So manufacturing is ramping up dramatically. We have great expectations for these programs, and we're looking forward into 2015. And I think as was mentioned once or twice in our commentary today, we have a number of Phase II trials that could potentially position this company for Phase IIIs in late '15. That said, our manufacturing and scale have to be positioned to actually handle those trials and to be positioned for, as you know, the regulatory packages that would need to go along with those trials. So you should expect us to invest accordingly in order to keep an accelerated development path for the products that we've talked about today.
And here is what CEO Erck added :
" So that's in anticipation of having a commercial product. And so the answer is we'll be prepared to market it ourselves. But clearly, if we're going to be a global product company, we'll have partners who will help us market it in far-away territories. "
Make your own judgment !
When common shares are increased , the percentage of ownership of the company decreases . However,it does not necessarily follow that the value or the price of shares will decrease .
Obviously, what the company does with the money and how the market interprets those moves are crucial.
If the company issues the additional shares to pay off debt , pay legal fees , court judgments...etc and its future prospects are dim, then the raise will definitely result in dilution ( lessening of real value ) .
However, if the company uses the funds from the new shares to expand and upgrade its infrastructure, expand its R & D for specific products , and improve its work force for specific products or services, then
the raise will tend to viewed by intelligent investors as increasing the net asset value of the company.
Here is what Barclay A. Phillips - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer had to say during the last conference call :
"During the quarter, as Stan mentioned earlier, we significantly strengthened our balance sheet by raising net proceeds of $108 million in an underwritten public offering. As we discussed at the time, the new capital would enable the clinical development of the RSV vaccine candidate in the elderly indication, in parallel with our maternal vaccination and pediatric indications.
In addition, the new capital will be used for general corporate purposes, which include capital equipment investments necessary to meet the manufacturing demand of our planned and future clinical trials. "
Further during the question and answer period:
George B. Zavoico - MLV & Co LLC, Research Division
A question -- Buck, you mentioned something about manufacturing expansion from capital investments that need to be made. Because you’re -- in preparation for all these trials, you're going to be making a lot of vaccines and a lot of different vaccines. So what capacity do you have now, and what capacity do you need to add for the clinical trials? And then, will you need to add more for commercialization?
Barclay A. Phillips - Chief Financial Officer, Principal Accounting Officer, Senior Vice President and Treasurer
Yes, thanks for the question. I think it should be recognized that we're actually manufacturing a lot of products right now. As Stan said, we're starting a bunch of clinical trials here over the next number of months through the end of the year. So manufacturing is ramping up dramatically. We have great expectations for these programs, and we're looking forward into 2015. And I think as was mentioned once or twice in our commentary today, we have a number of Phase II trials that could potentially position this company for Phase IIIs in late '15. That said, our manufacturing and scale have to be positioned to actually handle those trials and to be positioned for, as you know, the regulatory packages that would need to go along with those trials. So you should expect us to invest accordingly in order to keep an accelerated development path for the products that we've talked about today.
And here is what CEO Erck added :
" So that's in anticipation of having a commercial product. And so the answer is we'll be prepared to market it ourselves. But clearly, if we're going to be a global product company, we'll have partners who will help us market it in far-away territories. "
Make your own judgment !