Some days I just can’t get the timing of information and commentary right. No sooner had I posted on Invion (ASX : IVX), commenting on their lousy Lupus data announcement, then they “released the hounds” on their private placement. I suppose given the trading halt, this was anticipated and so yes, I am feeling like a bit of a loser at the moment.
But not nearly as big a loser as IVN shareholders must be feeling right now. Holy crap!
The terms of this financing are nothing short of remarkable. For a mere $1,001,000, the company just gave away 30% of the company. How? Because the equity purchase has basically got 250% warrant cover. In executing this private placement they have also effectively given up control over the company for a teeny million bucks (at some indeterminate point in the future). Not only will the institutional investor be laughing all the way to the bank, but Greg Collier probably paid 5-6% of the financing to H.C. Wainright for the pleasure of shafting IVX’s shareholders. Insult to injury.
I will bet you a good steak dinner that this ends up being a miniature form of Prima Biomed / Ridgeback all over again. Basically the formula is:
- Spin the data
- Pump the stock
- Short the hell down to all the “Mum and Dad” investors
- Exercise the options for what effectively amounts to a risk-free trade.
It also helps, in hindsight, to explain why they cut the lupus Phase II short (probably didn’t even start the last cohort of patients at 300mg) – they just didn’t have the cash and needed to start the spin-machine up. This situation should also tell any holder of a share in this company everything they need to know about the quality and future prospects of their investment. All I can say is this : I’m sorry.
Pathetic, Invion. Greg, this should be your last CEO job. Ever. No wonder American biotech investors think we’re so stupid.
Awesome Photo Credit: Ryan McGuire. http://www.gratisography.com/.