Posted on February 24th, 2014
by Gerald Commissiong
“If you can’t take the heat, get out of the kitchen” –Harry S. Truman
There is no doubt that, as an asset class, biotechnology provides investors with a love-hate relationship like no other, sometimes more hate than love. Even the biggest companies, with the longest histories and the most money at their disposal to advance the seemingly most de-risked assets are handed back failures from the FDA and other regulatory agencies throughout the world; or worse yet, have their drugs recalled from the marketplace after finding high rates of complications unforeseen in a clinical trial setting. What this implies is that there is absolutely no way of truly knowing the outcome of any programs’ fate. For a small company, this has tremendous implications from an enterprise risk perspective, as the revenues that support large companies through their failures are non-existent in small companies. The flip-side is, as was recently seen with Intercept Pharmaceuticals, that the innovation and risk small companies incur while developing their programs can be handsomely rewarded through proper preparation, diligent execution and, quite frankly, a heavy dose of luck.
For Amarantus, we have taken the view that building a world-class biotechnology company in the absence of product revenue (for the time being) requires a number of key elements in order to truly thrive, including; 1) products that are very near to market, 2) products that in mid-stage development, 3) early-stage products with significant potential, and 4) programs that will continue to fill the pipeline.
In order to make this pipeline relevant, it is important to have the cash necessary to drive these programs forward. In order to obtain the necessary cash on an ongoing basis, the Company retained F. Randall Grimes last summer in order to prosecute a grants program based upon the assets we had at the time. Mr. Grimes is continuing his work in this area and we are bringing on additional expertise in order to take full advantage of new opportunities presented to us by various agencies. Grants require a long review cycle prior to capturing funding, and therefore it is prudent to submit multiple applications in order to increase the likelihood of funding. We were pleased to see the NIH’s budget fully restored for fiscal year 2014 and are actively involved in liaising with various agencies and other organization.
In addition, we announced this morning the addition of two key members to the Amarantus team: Kerry Segal and Tiffini Clark. These additions are important to the Company because of the experience they bring to the Company from a business development and regulatory perspective. Business development transactions are a tremendous way to raise capital, offset costs and build investor confidence. However, they must be effective for the long-term benefit of the Company, rather than short-term gain at the detriment of long-term value. As such, adding these key executives to our team gives us key resources to assess key metrics and help us to make better more informed decisions given available options.
Further, the Company recently announced a transaction to raise an additional $3M via the exercise of warrants previously issued in the convertible note and warrant financing announced in October. The merits of this transaction are clear:
We are enthused by our investors expressing such optimism for the future of the Company with key milestones standing before us in the months ahead , as well as a tremendous show of confidence in management’s judgment regarding the optimal time to effect an up-listing to a national exchange. Once this transaction formally closes, we will be in a position to have substantive discussions with both NASDAQ and NYSE regarding the prospects for an up-listing, while being in a position to negotiate with $6.5M available within our current cap structure; meaning there will be significantly less market risk from their perspective regarding granting pre-approval for such a transaction. We were also delighted that our longstanding investor, Dominion Capital, committed to facilitate the transaction via a $0.5M loan to the Company with no conversion rights, to be repaid out of the proceeds of the transaction. We believe this transaction is a win for the Company, the investors and shareholders. Up-listing to a major exchange in North America is a key value-inflexion for the Company from a corporate standpoint as the Company will be exposed to a much broader base of retail and institutional investors capable of investing into our common stock. We believe this will add liquidity to our currency, as well as help mitigate short-term price fluctuations due to market manipulation that is rampant on the OTC. Biotechnology investing is also about credibility; our brand will gain in credibility once up-listed.
We believe it is always important to negotiate from a position of strength, and this transaction definitely puts us in a position of strength in a number of ongoing negotiations. To date we are happy to report that management has delivered on many of our pre-set milestones, and we believe we will continue to do so. I have always said that if we are going to bet on anyone, we’re going to bet on ourselves, and I believe strongly this wager will pay off in spades in the months and years ahead.
In closing, in addition to securing additional capital on attractive terms, we continue to forge forward with the formal addition of two talented executives to our team. As our pipeline continues to progress, we maintain our entire financial interests in our assets and our development team now has the necessary capital and business development support to execute on our plans. We are very pleased with our current position halfway through the first quarter of 2014, and we look forward to the weeks and months ahead.
Thank you for taking the time to read this blog.
Gerald E. Commissiong
President & CEO
Forward Looking Statements
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