AMGN is Targeting BCRX for Acquisition BCRX management has been acting quite peculiar these last few months and in my head, all the change stemmed from the pulled offering in August 2021. But what exactly changed and is there a logic chain we can follow to figure out what is going on? As far as I can tell, there can be two logic trains of thought on this subject, and I outline them below. I personally hate buyout talk but love logical speculation of events, and thus, I am going to lay out my two likely scenarios for the odd action we have seen in BCRX these last few months and you can take away your own conclusion. Option A – BCRX Management Shuns the Capital Markets It is very possible that upon trying to execute the offering in August, the investment banks moved the goal posts on Jon and company forcing them into lesser, and unattractive terms. We know that Wall Street plays hardball constantly, especially with money hungry bios, and thus, it’s quite possible that the investment banks working with Jon on the offering changed the rules and expected Jon to just fall in line, Jon did what most bio companies DON’T do, and said a hard and fast “No, this isn’t what we agreed to, and because I don’t need it this badly and I don’t want to shake our shareholders even more than this current bio beat down already has, we are going to seek better options than tapping the capital markets with stingy wall street players” Jon and team then turn back to Royalty Pharma and shake them into some meetings where they present more preclinical info on the Factor D program being set up behind 9930, and also ask them if they had any other ideas for extra funding. Perhaps at that point, Royalty Pharma put them in contact with OMERS in Canada who was looking for a good deal on royalties, and boom, you have a forged deal, much less dilution, shareholder friendly and now BCRX is free to go about their business. The “quietness” or odd behavior of the company since this scenario played out is Jon and company knowing the capital market raises game is rigged against them, it’s not a good bio market, and the investment banks are far too greedy right now, so in turn, they take complete focus off the capital markets all together. Why massage and hand hold the retail shareholders when we can’t use that avenue to get some capital anyway? Let’s turn our focus away from PR’s and IR and focus on the drugs and effectively go quiet on the public front for the most part. This is against what Jon originally has said about a “steady drum beat of news” but very plausible to turn your back on the capital markets that shut their doors to you. Option B – AMGN Stepped Up and is Making a Move Rewind back to the pulled offering. Look at the timeline of events, and follow this second logic chain. Not two weeks after the pulled offering, Steve Galson, head of strategy for AMGN comes onto our board of directors. Funny enough, he was awarded MORE options than any other new board member coming on AND he has a SHORTER contract. Kinda odd, but ok, lets move on. AMGN calls Jon after the pulled offering and says, “No no no, you don’t want to do that. We’ve had our eye on you as we’ve been hunting for therapies in this space since we lost the bid for Alexion over to Astra Zenica, and we like what you are doing and we are quite interested in a possible strategic transaction, but we need more time. Bring Steve into your board of directors, let him help you with some contacts on securing capital with Royalty Pharma, show us and Royalty Pharma what you have going on for the Factor D programs, and let’s get you some funding and see where we go from there.” Jon accepts, brings Steve in, and Jon and company go and negotiate money from OMERS and Royalty Pharma at a much better deal. On the other side, you have analysts like Liisa Bayko hearing through the grapevine about AMGN stalking BCRX a little and behind their financing, and she makes the statement of “We see BCRX blowing away estimates and possibly moving to a strategic transaction in 2022”. After Jon and company secure funding, they have another call with AMGN. “Jon, we want you to take that money, and build a team completely dedicated to your Factor D programs and 9930. Hire, train, and build a big team as obviously you know how with everything you’ve done with Charlie and his team for Orladeyo. We are so very impressed with your launch we want you to take that money, do all the prep work and hire and build the team for 9930, we’ll give you until May at the end of Steve’s contract do hire, train, build, and report back to us. We also want you to show us the unblinded data on the POC and PNH trials for 9930, and we wlll make our move around that time if everything lines up. Also, keep things with the stock grounded and quiet during this period of us doing do diligence please.” Jon says, “OK, will do. However what are you valuing Orladeyo at? Obviously, you were with us through the financing for 9930, you’ve seen some data, you know what we have, our curiosity is what value are you placing on Orladeyo? “ “Well Jon, you’ve given guidance, but said you need to update it. You have more information now, what do you think peak sales are gonna be? Where do you see it going?” “Well, I can’t discuss that, it’s not public, but I’ll put something together, we will do some internal forcasting, and we will get it out soon. We planned to do this at the Q4 report in March, but we will get it out sooner once we get 2021 total numbers in and do some internal calculations.” January hits, and you get the PR for updated Orladeyo guidance. While the news is fantastic, it also serves as a valuation metric on that program, and now AMGN dissects that information, looks at the 9930 data coming through, and has a very good idea of what these programs are worth. We also know that Galidesivir has had preclinical movement and investment much higher than normal, and also that there is more Factor D molecules in preclinical. Perhaps the preclinical data hasn’t been released yet because they are ALSO being used to value this program. What I’m saying is that BCRX management is forwarding Galidesivir and showing what it can REALLY do so that AMGN can value that program more accurately, and also they are showing in pre clinicals just how versatile 9930 really is and what they can do with their Factor D patents, to which they have many. All of it is a simple show of value to AMGN whilst BCRX is building a team with the understanding that in April/May, AMGN finally pounces given as much data as possible and proper valued programs to finish the numbers and do a strategic transaction. Jon even announced “FLAT Q1 Numbers due to contract timing and negotiations” specifically to keep the stock price flat and keep people “uninterested” while the deal is finalized. If you think about it, if we are guiding flat for Q1, at 45M yet again, and he guided for 250M for the entire year, where he is ALWAYS conservative, then we literally have to do an average of about 71M per quarter, for every other quarter this year. That pretty damn aggressive from a Q1 that’s only gonna be 45M flat…. Right? Something isn’t adding up, and I think it’s done by design.
Enter the password to open this PDF file:
-
-
-
-
-
-
-
-
-
-
-
-