First of all, let me say I like the way you think.
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Posted On: 06/20/2020 1:53:39 PM
Re: LaundryMoney #38325
First of all, let me say I like the way you think. I also look for event correlations -- sometimes with success, frequently without.
A couple of comments in no particular order:
1. NP has made several references to Big Pharma in the last couple of CCs and videos. Those discussions always seem to be in the context of distribution deals for COVID, which seems reinforced by his comments that "they are waiting for results." I can imagine success with COVID would force new or renewed attention from BP, but I don't think it will immediately convey to all of the other exciting, but yet unproven, indications.
In terms of COVID, I don't think CytoDyn needs anything other than distribution, and better yet, a single distribution partner that has global reach. CytoDyn is many years away from having that kind of network and I doubt they are even interested in developing it. I have to believe the FDA would look favorably at a BP distribution arrangement, as it would increase confidence that this importand and complicated process will handled in a professional manner.
Could a friendly distribution deal with a BP lead to something more serious (fill in the blank) -- sure, but since none of the other potential indications have been adequately proven, I think it's a little early for a buyout. Now, that could be a completely different story in 2021 or 2022.
2. The MRK debt offering is interesting but I'd bet it has more to do with cheap money. The PR indicates Merck intends to use the proceeds for, among other things, "the repayment of outstanding commercial paper borrowings and other indebtedness with upcoming maturities." I'm not convinced they'd use a four tranche debt instrument to buy another company, but I'm no expert.
3. However, just for a moment, let's assume that the debt is directly correlated to a buyout offer. CytoDyn's current 700M Authorized Shares (A/S), and a buyout of $4.5B, equates to $6.43 per share ($5.63 per share with 800M A/S). If we assume for a moment that CYDY stock is worth somewhere around $30 per share, the total value of a buyout offer (cash + stock) would need to be $21B (assuming 700M A/S). That would mean MRK would need to throw a lot of their own stock at this deal -- for a company that has frankly not yet proven its many exciting indications.
4. The revised Termination Without Cause provision in the recent 8k filing doesn't exactly feel like a golden parachute to me. Yes, it is incrementally higher for NP, but it's not exactly a windfall. At the same time, it's hard not to remember NP's recent comment that everyone is replaceable.
5. I agree that CytoDyn (and Dr.BP) has been recently throwing (deserved) shade at Gilead. It will certainly be interesting to see how the events of the next year or so unfold regarding Gilead's' competitive portfolio and pipeline.
6. You Said:
Good luck to everyone in the coming weeks.
A couple of comments in no particular order:
1. NP has made several references to Big Pharma in the last couple of CCs and videos. Those discussions always seem to be in the context of distribution deals for COVID, which seems reinforced by his comments that "they are waiting for results." I can imagine success with COVID would force new or renewed attention from BP, but I don't think it will immediately convey to all of the other exciting, but yet unproven, indications.
In terms of COVID, I don't think CytoDyn needs anything other than distribution, and better yet, a single distribution partner that has global reach. CytoDyn is many years away from having that kind of network and I doubt they are even interested in developing it. I have to believe the FDA would look favorably at a BP distribution arrangement, as it would increase confidence that this importand and complicated process will handled in a professional manner.
Could a friendly distribution deal with a BP lead to something more serious (fill in the blank) -- sure, but since none of the other potential indications have been adequately proven, I think it's a little early for a buyout. Now, that could be a completely different story in 2021 or 2022.
2. The MRK debt offering is interesting but I'd bet it has more to do with cheap money. The PR indicates Merck intends to use the proceeds for, among other things, "the repayment of outstanding commercial paper borrowings and other indebtedness with upcoming maturities." I'm not convinced they'd use a four tranche debt instrument to buy another company, but I'm no expert.
3. However, just for a moment, let's assume that the debt is directly correlated to a buyout offer. CytoDyn's current 700M Authorized Shares (A/S), and a buyout of $4.5B, equates to $6.43 per share ($5.63 per share with 800M A/S). If we assume for a moment that CYDY stock is worth somewhere around $30 per share, the total value of a buyout offer (cash + stock) would need to be $21B (assuming 700M A/S). That would mean MRK would need to throw a lot of their own stock at this deal -- for a company that has frankly not yet proven its many exciting indications.
4. The revised Termination Without Cause provision in the recent 8k filing doesn't exactly feel like a golden parachute to me. Yes, it is incrementally higher for NP, but it's not exactly a windfall. At the same time, it's hard not to remember NP's recent comment that everyone is replaceable.
5. I agree that CytoDyn (and Dr.BP) has been recently throwing (deserved) shade at Gilead. It will certainly be interesting to see how the events of the next year or so unfold regarding Gilead's' competitive portfolio and pipeline.
6. You Said:
Quote:I enjoyed your post and I think it's a good exercise. You could be completely right -- and I could be completely wrong. We all have thoughts, concerns, and theories -- and it's incredibly useful to have such a high-quality forum for sharing these ideas.
"I understand this may be a fruitless post, but it was the weekend and there's nothing better than drumming up speculation that may have no merit on internet message boards."
Good luck to everyone in the coming weeks.
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