Hey Sherlock, Another nice post. I agree abo
Post# of 151031

Another nice post.
I agree about Dr. Jay. You don't have the career he has without there being a genuine desire to help people. Whether he can help get LL into the world's hands while maximizing shareholder value is what we're about to see play out, and it's hard to know just how well that will go. I don't think it'll go bad, but wonder if it will be just plain good or somewhere closer to amazing?
Because he isn't as experienced in that part of the process as he is on the medical and philanthropic side, I think he needs help. All three are important, of course. And while I think he will tirelessly work to get LL approved, I believe that his career choice to be on the research side of this business instead of the pharma side is going to limit his desire to try buliding Cytodyn into the next Regeneron.
It's a guess on my part, but I see him as wanting LL to succeed more than being the one to be at its side through all that success. He's not going to be cheering for the multi-billion dollar thresholds LL will hit in sales like the pharma companies will do (I hilariously received the equivalent of $50 in gift cards for when Spiriva hit $2 billion) but rather the HIV lives cured or the cancer lives extended.
Early on in his tenure there was a leaked meeting with Paulson investors (I believe I have that right) where he said something like "we don't have many bites left of the apple" and people argued if he meant for the drug to succeed or for there to be a path forward in HIV indications. For the record, I think he was talking about HIV. But my point is that he knows you can't research the thing forever. There needed to be a solid strategy to get LL to market, and I think he's helped do just that by running impactful, but inexpensive mouse studies and looking to partner up.
So I do think he's not the standard CEO, but I also think he's got his eyes on the ultimate prize of approval and he's going to need help from an established pharma company, the NIH, or big foundations for that.
You wrote:
"Any thoughts on a CVR as part of the eventual deal?"
It really all depends on the financials of the company who partners with, and ultimately buys Cytodyn. Most deals for licensing rights are going to be a good chunk of money up front, with milestone payments for things like completing a phase 2 or 3 trial, getting a BLA submitted, earning approval, etc. Then there's the rights in regards to marketing and the payments Cytodyn would receive.
Every deal is a little bit different, but the basics tend to play out across the board which is upfront money, money for milestones, agreements as to who pays for what moving forward, and rights of first refusal when it comes to anyone trying to buy the company outright.
Here's the details from Sanofi's licensing agreement with Provention Bio for their type 1 Diabetes drug TZIELD.
In October 2022, Provention Bio and Sanofi entered into a co-promotion agreement for the U.S. launch of teplizumab (TZIELD), aimed at delaying the onset of Stage 3 type 1 diabetes (T1D). The key financial terms of this agreement included:
Upfront Payment: Sanofi made a non-refundable payment of $20 million to Provention Bio. This payment granted Sanofi an exclusive, one-time right of first negotiation (ROFN) to obtain global rights to commercialize teplizumab for T1D, exercisable until June 30, 2023, with possible extensions under specific conditions.
Co-Promotion Expenses: Provention Bio committed to reimbursing Sanofi for field force-related expenses incurred in commercializing teplizumab in the U.S., up to a cap of $33 million. This cap includes a predetermined margin on these expenses.
Equity Investment: Contingent upon FDA approval of teplizumab, Sanofi agreed to purchase $35 million worth of Provention Bio's common stock at a premium price. Specifically, Sanofi would acquire shares at 140% of the daily volume-weighted average price over the five trading days preceding the closing date, which was to occur no later than February 16, 2023.
These financial arrangements were designed to leverage Sanofi's commercial infrastructure and expertise in endocrinology to expand the reach of teplizumab, while providing Provention Bio with substantial funding to support the therapy's launch and development.
Later comes the buyout if all goes well, which it did. Provention got approval with the help of Sanofi, and not long after came the buyout. Here are the details of that:
"In March 2023, Sanofi acquired Provention Bio Inc. in a transaction valued at approximately $2.9 billion. The agreement included a cash tender offer of $25.00 per share for Provention Bio's outstanding common stock"
For those who weren't in it at the time, here's where it was the trading day before the buyout:
"The trading day before Sanofi's acquisition announcement for Provention Bio (PRVB) on March 13, 2023, was March 10, 2023. On that day, PRVB's stock closed at $6.70 per share. This price marked a significant increase in the stock's value, likely due to speculation and market reactions leading up to the buyout announcement."
That was a nice morning for ol' Respert. If I remember correctly the news dropped at like 2am eastern on a Monday morning. In fact, I just went to check and it was 2am. And the cool thing about what happens at that point is that the stock typically rises very close to the buyout price, so if you want to squeeze a little money out at like a 5% discount and not have to wait what could be 3 months for your shares to convert you can usually do it. Other investors are happy to take a "guaranteed" 5% win for waiting three months, and you can forego a little extra cash later to get cash in hand today.
At any rate, that kind of deal is pretty typical. Sometimes the acquiring company will have to get creative to cover the cost and they’ll offer a dollar amount per share plus an additional offer of their own shares converted at some rate like 1 new share of (let’s just say) Merck for every 10 shares of CYDY. So your 100,000 shares at a buyout of $25 gets you $2,500,000 cash into your trading account plus you’ll end up with 10,000 shares of Merck.
And it’s not just done if they don’t have enough cash. Chatgpt offered a more comprehensive breakdown of the reasons but I’ll just share the recap:
“In essence, a share conversion serves multiple purposes: it aligns interests, manages cash flow, provides tax benefits, preserves valuable assets, and mitigates risk, all while offering a strategic way for the acquiring company to structure the financial aspect of the buyout.”
This could be where a big pharma wants to entice us shareholders into being invested in them taking stewardship of Leron, throwing out some additional incentives that make us feel more comfortable about voting yes on their offer.
So again, it’ll all come down to the financials of the company laying out the big bucks and how they can match what Cytodyn wants while going as easy as possible on their bottom line.
A final word on Jay and taking a different path. If you think about all things in life, it's pretty rare when someone comes along to blaze a trail nobody before them had thought to try. Jay is unique and LL does have leverage through it's potential as a platform drug, but I don't think either are of the unicorn variety when it comes to licensing and buyouts.
A quick and interesting side note: I was asking chatgpt some additional questions about total value of licensing deals over the last decade and it seems like many of them seem to fall around $1 billion in total value. Not too shabby. I wonder what a deal like that would do to our price?

