Jake--appreciate the detailed post. Lots to unpack here. But first, just to say, I loved the phrase "far more aspirational than realistic." I resemble that remark! It would make a fine epitaph for my headstone... when that day, alas, comes to be.
Your point about Big Pharma's primary leverage--CYDY's size and limited finances--is spot on and sobering. And yet in the last six months we have the York deal, funding from a High-Net-Worth Individual, and confirmation of at least two investigator-initiated trials. So that provides some breathing room, if not leverage. (And no hint of desperation from management... in fact, what I would call quiet confidence). These kind of alternative arrangements imply substantial interest--from professionals in the finance world as well as medicine--concerning what our molecule can do. They also suggest a persuasive and creative management team, which has got to count for something. (See the York deal, for example, whose terms I thought were pretty favorable to Cytodyn... if the share price reacts favorably to upcoming news).
In speaking of your experience in negotiations "Every participant's overriding goal was achieving maximum value, not fair value..." Seems harsh to me, but I have no reason to doubt that's the way the game is played. Your thought continued "although the skillful use of Leverage by all sides often ultimately produced a reasonable facsimile of the latter." (i.e., fair value). That I can live with. Would you mind elaborating on that, if you've got a story or example that bears on the current situation?
I take Dr J at his word when he said Cytodyn isn't in a position to commercialize leronlimab. But he hasn't said a thing about selling the company outright or done the kind of things you might expect a CEO to do if a sale is on the horizon. My preference is to partner the drug for cancer, and then use the upfront cash and royalties to prioritize and explore other indications--fibrosis in various organs, inflammatory maladies, and of course HIV, Alzheimers, and the long-acting version of leronlimab. That is how I would like to see things play out. Is that a likely outcome? Probably not. Personally I don't know if there are any precedents for this in the business or biotech worlds. But there is also no precedent for leronlimab as a safe and superior therapeutic for the myriad of inflammatory maladies that afflict humanity. Oh, and cancer too! This kind of a new business model--if the company is not sold outright--would allow Cytodyn to thrive by doing preclinical and Phase 1/2 studies in various indications, and then parcelling out the drug for other companies to commercialize. That's a business model based entirely on a single molecule! But what a molecule...
Think about what is going to happen after news of the cancer breakthrough overwhelms the internet--not to mention the medical journals. Talk about the belle of the ball--we'll have Big Pharma execs fighting in the hallways, salivating and drooling all over themselves, begging for a dance! I predict more than one Big Pharma CEO will get axed if their shareholders find out they didn't make a competitive bid on the cancer indication alone. That's a kind of leverage most of these CEOs have never faced before. I suspect many will get all pissy and huffy--and go down with the ship. And... all it takes is one to buy in.
I have collectivist inclinations, and believe in "shared opportunity and mutual self-interest" as the basis for a less free-wheeling and predatory capitalism. But I have no illusions that the business world works that way, even though I hope that will change with the unfolding arc of history. When it comes right down to it--I think we have a shit-ton of leverage. How Hoffman and Lalezari play high-stakes poker... well, that does remain to be seen. But I like the quiet confidence I've seen so far. I'm thinking Hoffman was an excellent addition...
How's this for an aspirational scenario that might play out--lifted from an advance copy of "The Cytodyn Saga" screenplay that Evil Rabbit is working on (!). Robert Hoffman and Robert Davis (MRK) are meeting in the boardroom, doing most of the talking, with Dr Lalezari in attendance:
Hoffman: "The upfront money is fine, no problems there. But the way you are proposing to develop the molecule... I've seen this before. You are slow-walking us. We know you have all those billions invested in ADCs. But that's your problem."
Davis gulps, looks flustered: "But my problem is your problem. Look, I'm having a hard time with the Board. They think I'm giving away the farm! To get that upfront money, I had to commit to seeing other cancer assets through Phase III. I thought we had an understanding... that the CVRs were going to do the trick?"
Hoffman: "We have another proposal under consideration. Less upfront, but they have committed to a rapid timeline that will get leronlimab into patients very quickly. And their royalties are significantly better than what you have offered. Would you like to reconvene your Board and get back to us? We need something better. On those two points in particular. Say by Tuesday."
Davis sighs, and his head drops: "Yes, I'll get back to you. Jeez, I thought we made a generous proposal back in February."
Lalezari speaks up: "You saw the preliminary data. You knew it worked back then. You've had plenty of time to convince your board."
Hoffman looks over at Lalezari, who almost imperceptibly shakes his head. The phone rings. Hoffman: "Oh, that must be Roche. Sorry, Bob. We have a couple more meetings this afternoon. Are we still on for the French Laundry this evening?"
Davis gathers his papers and gives each a baleful glance. "Yes" he mutters under his breath... But he perks up at the thought of a charcoal grilled Japanese Wagyu, with those lovely sauteed Chanterelles. And a Silver Oak Cab from 2019 to wash it all down. "And I don't have to pay for it" he thought...
Look Jake, I have no idea how this is going to play out. I see some possibilities as the Cytodyn saga unfolds... and I try to write about them with some verve and gusto. Maybe the "buyout is a sellout" line was a little too flip (even though the rhyme and rhythm was too good to pass up). But I'll continue to explore the possibilities, and be provocative, which may have some value to this board precisely because I am not from the business world. But there are a lot of holes and gaps in my knowledge, and I don't mind being schooled by someone who's been there. I welcome and appreciate your measured observations, based on real experience in business and the boardroom. A year or two back Respert took the time to engage me on something similar, and I've appreciated the both of you for the extended responses. (And all the others). So keep it coming!
As stated, I would like to see Cytodyn partner with firms on an indication by indication basis (cancer, fibrosis, neurology; find some rational way to slice up the Big Pie). But I suspect there are problems with that approach, problems that I know nothing about. On the other hand, if the reasons against that approach are "We just don't do business like that"... Well, a great deal of conventions are being up-ended these days. Why not business-as-usual on Wall Street and the biotech world?
Even though I don't really want a buyout, I think your following comments deserve the last word. Because you articulate the "conundrum" very well, and you make so much common sense:
"Even with 3 or more serious and active BP bidders, but without being privy to the actual negotiations, we shareholders/board members would have no vantage point nor ability to critique how well each participant used and deflected Leverage to achieve its goal of maximum value. Consequently, if CYDY were to announce in the future what most might perceive as a disappointing proposed BO number, while it will be very easy to characterize such a number as a sellout, doing so without knowing all the moving parts that produced that number would, in my opinion, be irresponsible."
Your point about Big Pharma's primary leverage--CYDY's size and limited finances--is spot on and sobering. And yet in the last six months we have the York deal, funding from a High-Net-Worth Individual, and confirmation of at least two investigator-initiated trials. So that provides some breathing room, if not leverage. (And no hint of desperation from management... in fact, what I would call quiet confidence). These kind of alternative arrangements imply substantial interest--from professionals in the finance world as well as medicine--concerning what our molecule can do. They also suggest a persuasive and creative management team, which has got to count for something. (See the York deal, for example, whose terms I thought were pretty favorable to Cytodyn... if the share price reacts favorably to upcoming news).
In speaking of your experience in negotiations "Every participant's overriding goal was achieving maximum value, not fair value..." Seems harsh to me, but I have no reason to doubt that's the way the game is played. Your thought continued "although the skillful use of Leverage by all sides often ultimately produced a reasonable facsimile of the latter." (i.e., fair value). That I can live with. Would you mind elaborating on that, if you've got a story or example that bears on the current situation?
I take Dr J at his word when he said Cytodyn isn't in a position to commercialize leronlimab. But he hasn't said a thing about selling the company outright or done the kind of things you might expect a CEO to do if a sale is on the horizon. My preference is to partner the drug for cancer, and then use the upfront cash and royalties to prioritize and explore other indications--fibrosis in various organs, inflammatory maladies, and of course HIV, Alzheimers, and the long-acting version of leronlimab. That is how I would like to see things play out. Is that a likely outcome? Probably not. Personally I don't know if there are any precedents for this in the business or biotech worlds. But there is also no precedent for leronlimab as a safe and superior therapeutic for the myriad of inflammatory maladies that afflict humanity. Oh, and cancer too! This kind of a new business model--if the company is not sold outright--would allow Cytodyn to thrive by doing preclinical and Phase 1/2 studies in various indications, and then parcelling out the drug for other companies to commercialize. That's a business model based entirely on a single molecule! But what a molecule...
Think about what is going to happen after news of the cancer breakthrough overwhelms the internet--not to mention the medical journals. Talk about the belle of the ball--we'll have Big Pharma execs fighting in the hallways, salivating and drooling all over themselves, begging for a dance! I predict more than one Big Pharma CEO will get axed if their shareholders find out they didn't make a competitive bid on the cancer indication alone. That's a kind of leverage most of these CEOs have never faced before. I suspect many will get all pissy and huffy--and go down with the ship. And... all it takes is one to buy in.
I have collectivist inclinations, and believe in "shared opportunity and mutual self-interest" as the basis for a less free-wheeling and predatory capitalism. But I have no illusions that the business world works that way, even though I hope that will change with the unfolding arc of history. When it comes right down to it--I think we have a shit-ton of leverage. How Hoffman and Lalezari play high-stakes poker... well, that does remain to be seen. But I like the quiet confidence I've seen so far. I'm thinking Hoffman was an excellent addition...
How's this for an aspirational scenario that might play out--lifted from an advance copy of "The Cytodyn Saga" screenplay that Evil Rabbit is working on (!). Robert Hoffman and Robert Davis (MRK) are meeting in the boardroom, doing most of the talking, with Dr Lalezari in attendance:
Hoffman: "The upfront money is fine, no problems there. But the way you are proposing to develop the molecule... I've seen this before. You are slow-walking us. We know you have all those billions invested in ADCs. But that's your problem."
Davis gulps, looks flustered: "But my problem is your problem. Look, I'm having a hard time with the Board. They think I'm giving away the farm! To get that upfront money, I had to commit to seeing other cancer assets through Phase III. I thought we had an understanding... that the CVRs were going to do the trick?"
Hoffman: "We have another proposal under consideration. Less upfront, but they have committed to a rapid timeline that will get leronlimab into patients very quickly. And their royalties are significantly better than what you have offered. Would you like to reconvene your Board and get back to us? We need something better. On those two points in particular. Say by Tuesday."
Davis sighs, and his head drops: "Yes, I'll get back to you. Jeez, I thought we made a generous proposal back in February."
Lalezari speaks up: "You saw the preliminary data. You knew it worked back then. You've had plenty of time to convince your board."
Hoffman looks over at Lalezari, who almost imperceptibly shakes his head. The phone rings. Hoffman: "Oh, that must be Roche. Sorry, Bob. We have a couple more meetings this afternoon. Are we still on for the French Laundry this evening?"
Davis gathers his papers and gives each a baleful glance. "Yes" he mutters under his breath... But he perks up at the thought of a charcoal grilled Japanese Wagyu, with those lovely sauteed Chanterelles. And a Silver Oak Cab from 2019 to wash it all down. "And I don't have to pay for it" he thought...
Look Jake, I have no idea how this is going to play out. I see some possibilities as the Cytodyn saga unfolds... and I try to write about them with some verve and gusto. Maybe the "buyout is a sellout" line was a little too flip (even though the rhyme and rhythm was too good to pass up). But I'll continue to explore the possibilities, and be provocative, which may have some value to this board precisely because I am not from the business world. But there are a lot of holes and gaps in my knowledge, and I don't mind being schooled by someone who's been there. I welcome and appreciate your measured observations, based on real experience in business and the boardroom. A year or two back Respert took the time to engage me on something similar, and I've appreciated the both of you for the extended responses. (And all the others). So keep it coming!
As stated, I would like to see Cytodyn partner with firms on an indication by indication basis (cancer, fibrosis, neurology; find some rational way to slice up the Big Pie). But I suspect there are problems with that approach, problems that I know nothing about. On the other hand, if the reasons against that approach are "We just don't do business like that"... Well, a great deal of conventions are being up-ended these days. Why not business-as-usual on Wall Street and the biotech world?
Even though I don't really want a buyout, I think your following comments deserve the last word. Because you articulate the "conundrum" very well, and you make so much common sense:
"Even with 3 or more serious and active BP bidders, but without being privy to the actual negotiations, we shareholders/board members would have no vantage point nor ability to critique how well each participant used and deflected Leverage to achieve its goal of maximum value. Consequently, if CYDY were to announce in the future what most might perceive as a disappointing proposed BO number, while it will be very easy to characterize such a number as a sellout, doing so without knowing all the moving parts that produced that number would, in my opinion, be irresponsible."
17
