I have read through the MCH analyst report and will post my rebuttal by section here. The cover page which has the summary and highlights argues that the UCB data was "statistical noise", that EMab will not work in SLE, the company has less than one year's cash, that they will raise money either Q4 09 or q1 2010, and that UCB will not present full Emab data till June 2010 at EULAR conference. Essentially, the entire argument reduces the company to Emab in SLE then assigns zero probability to success of that resulting in the sale of the company for 2 dollars per share. The 2 dollar PPS sale price primarily reflects the value of the tax-loss carry forward would have for an acquirer, and assigns near zero value to the rest of the company.
I will look at Emab in SLE in more detail in subsequent posts, but I would point out the obvious fact that a company which is going to have 5 pivotal trials initiated in 2010 is hardly a one-trick pony.
Secondly, it is far from obvious even using his assumptions that a major dilutive financing will occur in the next 3-6 months. He posits a 10 million share offer, which is a 13% dilution, if that gets the company over the finish line, is that really a disaster?
He also states in his summary that the FDA put the hold on ALLEVIATE trials over the bottling issue. That is factually wrong. UCB put the hold on, and we all know that was so it could get a peek at the data and find out whether Emab was for real or not.
Finally, UCB just announced that full data of the phase 2 will be released in early March. In fact, waiting till that data is out would make financing more likely successful, and would still be within the Q1 2010 timeframe of MCH. |
