Member Info for itsallamess

Its basic math.

The closer the rights price is to your target average, the more shares you have to buy to move the needle.

EG,At 40p, the shares are very strong at lowering your average.

​At 70p, the shares are "weak," requiring a massive amount of new capital to see the same result.

Institutional investors are not "team players"; they are stewards of other people's money. If a board sets a rights price at £1.35 while the market is trading at 55p, it is a total deal-breaker for these funds. They have a legal obligation to get the best deal for their clients; paying a 145% premium to the company would be a breach of that duty.

We want a low rights offer!

Say someone owns 10,000 shares at a price of £2.00 a share. The rights offer prices are 40p, 50p, 60p, and 70p. How much would each case need to spend to get an average of £1.00 a share?

​To reach an average price of £1.00 per share from an original £2.00 entry, you are trying to cut your cost basis by exactly 50%. The math depends entirely on the "pulling power" of the new, cheaper shares.

​Here is the breakdown for your 10,000 shares (Original Investment: £20,000)

​Rights Offer at 40p

you would need to purchase 16,667 new shares. This results in a total spend of £6,667, leaving you with a total of 26,667 shares. You spend roughly 33% of your original capital to fix the position.

​Rights Offer at 50p

you would need to purchase 20,000 new shares. This results in a total spend of £10,000, leaving you with a total of 30,000 shares. You spend exactly half of your original investment to hit the target.

Rights Offer at 60p

you would need to purchase 25,000 new shares. This results in a total spend of £15,000, leaving you with a total of 35,000 shares. You spend 75% of your original investment to hit the target.

​Rights Offer at 70p

In this case, you would need to purchase 33,333 new shares. This results in a total spend of £23,333, leaving you with a total of 43,333 shares.

You actually have to spend more than your original £20,000 investment just to drag the average down to £1.00.

However, I personally believe that the price is a way overreaction and should be higher..

But as ive said before, a low rights price is better for us.. it means we can buy more shares which has a better chance to average down and the confidence of a fulfilled offering will rebound fast

No rational investor will pay for a share in a rights offer, which in nature is meant to be a gift/discount for owners.

Setting a price higher than the market value will signal that the board is out of touch with reality or desperate

​The market will interpret this as as the company needs money so badly they are praying for a miracle. but no one is willing to pay that price..

JR, I dont know what planet ypu are on.. the price will be the average market price leading up to the announment minus a discount for the offering.

If the price was higher no one would participate.. why would they..

Hopefully on EGM day, march 2nd

Only once the board have the votes to release the 80 million shares can they finalise the offer and decide on the offer price

Dailymail comment, the drop seems disproportionate!

Its true, it far too low..

Well we all know tge markets are manipulated. So what could be happening?

Price pushed liw so funds can buy in to allow them the right to purchase on the rights offer for even lower, to sell all when it super rebounds after the rights offer is agreed and filled.

Its simple maths.. the lower the share price the more shares you can buy which lowers your average down.

If you are struggling with the maths, use a calculator.. or better still, run a few scenarios in AI.

I would be interested what you find out

Example

Just calculate this

Own 100 shares paid £2.00 a share

How many new shares and cost to average down to £1?

Offer price 40p = buy 167 shares at £66.80

Offer price 50p = buy 200 shares at £100.00

Offer price 60p = buy 250 shares at £150.00

So the lower the offer price the best chance you get to average down at a lower price.

Plus the bonus is, the low price is a over reaction that will correct itself after the deal is done

If the belief is that the share price is oversold and an overreaction due to uncertainty, then when the funding is secured, uncertainty leaves and we should raise back up..

In the mean time a lowest posible share price for the offering in in our favour.

As long as they secure 40 million using the maximum of 80million shares.. its all good.

The lower the offering price, the more shares you can buy (assuming you own now) = the more you can average down.

The lowest share price we really want for the rights offer is 43p

And the market price around 70p.. higher if possible.

But the lower the rights to buy price will average you down the quickest

Its worth researching and looking into why Faron going it alone and why the partnership deal fell through.

It seems it comes down to what happened with verona..

When AbbVie’s Verona trial failed to show a survival benefit in MDS, Faron’s potential partner saw that and pulled out, thinking the whole MDS market was too risky for a long-term survival play.

However Faron doesn’t see it that way. They think the Verona failure is irrelevant because it was a different drug with high toxicity, whereas bex shows it’s much safer and actually works where others didn't.

​Since the partner walked, Faron decided to just go it alone with this 40 million euro rights issue.

Basically they are betting everything on a faster path. Instead of waiting years to prove Overall Survival (OS), they’ve switched to proving Complete Response (CR).

While Overall Response (OR) just means the patient improved slightly, CR means the cancer is actually undetectable and blood counts are back to normal.

​The FDA has already signed off on this strategy. They’ve agreed that if Faron can show a strong enough CR rate—which they’re currently hitting at 43% compared to the industry standard of about 15%—they can get accelerated approval.

This turns a five-year wait into a 12-month sprint.

So by funding it ourselves through the rights issue, we’re taking on more risk, but we’re also keeping 100% of the upside if they hit that 43% target again in the next phase.

They will never sell anything if its priced above what the market price.

Interesting, inderes has downgraded faron price target to £1.30.

So if we were to reach anywhere near this after the offering, the lowest possible offering price would be best for us to grab more stock.

SGD, thats a good point, the 40 million should add value to the company.

I was just giving a basic diution of 80 mill shares minus 35% for a lower offering price (which is a conservative guess)

All making the point the price should be higher than what it is now and possibly thats what the management were working on..

However, even at that price.. the markets are sticking us at the lowest posible price..!

Those 3 large trades are a signal that the smart money is preparing for the March EGm

getting there shares ready so they can buy in on the offering.

Its really seeting the bottom price as this is the low the stock is going so we will buy in.. or if its a short covering, also says this is as low as the stock is going..

All an over reaction BTW

Rights to buy will get us through phase 3, any shortfall and phase 3 funding will be vis the European funding.. keeps everything in house, no big pharma taking the lions share, European and European investors benefiting from a European companies research!

Sound perfect!

I saw something about this a few months ago.. maybe it was on farons radar to investigate it.