Douglas W. House's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/767182/comments http://seekingalpha.com/article/1436261/comments?source=feed#comment-19140821 19140821
I wouldn't say that the financiers made no/little effort in this transaction. There's much work to be done in going public. They are well compensated for their expertise, effort and skill, though. Great work if you can get it.]]> Wed, 22 May 2013 19:00:11 -0400
I wouldn't say that the financiers made no/little effort in this transaction. There's much work to be done in going public. They are well compensated for their expertise, effort and skill, though. Great work if you can get it.]]> http://seekingalpha.com/article/1436261/comments?source=feed#comment-18923911 18923911 Thu, 16 May 2013 20:26:59 -0400 http://seekingalpha.com/article/1436261/comments?source=feed#comment-18923191 18923191 Thu, 16 May 2013 19:58:24 -0400 http://seekingalpha.com/article/1436261/comments?source=feed#comment-18910211 18910211
My comments on the exit strategy are spot on right. A pre-determined way to get out of an investment profitably is an integral part of the involvement of early investors, investment banks, VC’s, etc. This has been going on for decades. It is an integral of the venture capital/financing business model. A profitable exit is buttressed by the demand for the firm’s shares. This is why executives do presentations at investor conferences, emerging technologies symposia, etc. It doesn’t mean that anyone is doing anything untoward. It just means that it is very rare that the timing is right for a long investment in a firm at this stage of its corporate life. This is precisely why retail investors should avoid IPO’s, for example. Every new issue is overpriced right out of the blocks and a credible support level has not been determined yet. Poor timing.

Your “90% of the total capital raised” comment sounds, pardon me, quite naive. My point is the substantial pound of financial flesh that early investors, VC’s, investment bankers take for their involvement with an early stage company. Academics routinely state that this is fair compensation for the risks taken. All I know is that it is the cost of doing business and the cost of doing a financing deal with these entities. It ain’t cheap. ONVO’s take via the warrants does not reflect the total capital raised (based on the market price of a share). It is ONVO’s proportion of the total. The other stakeholders/investors got the rest. You may recall that Google (http://bit.ly/I2oi2V) totally bypassed the investment bankers in its IPO by offering shares via a Dutch auction. This enabled it to raise almost all the capital for its own use. This is the way it should be, should it not? Instead, there is an enormous cut taken by the financiers when companies access the capital markets. It is the cost of going public. Small firms don’t possess a thimble-full of the muscle necessary to go it alone. This, again, typically means that the timing is poor for a long position. The financiers have to exit, the market has to establish a sustainable demand for shares and the company needs to deliver the caliber of fundamental results that justify acquiring shares. Retail investors must be patient.

You discount the planned exit by 190 shareholders. The only comment I have in response is that you have no business managing your own investments (if this is what you do) if you do not see the significance of this information. It may be prudent for you to stick with index funds or index-linked ETF’s.

Your comment re “shady real estate types” also misrepresents my statements. Nowhere in my article do I impugn anyone’s integrity. The point I was making with the RERR section was that it had no value other than to a reverse merger suitor. The principals involved in the business just appeared to be inexperienced and ill prepared for the venture based on the information in the S-1.

And, lastly, I do not have a short position in ONVO nor do I have an advisory service or any other relationship where I would profit from the behavior of ONVO’s stock. My article is a follow on piece to my earlier submission re regenerative medicine.]]> Thu, 16 May 2013 14:53:03 -0400
My comments on the exit strategy are spot on right. A pre-determined way to get out of an investment profitably is an integral part of the involvement of early investors, investment banks, VC’s, etc. This has been going on for decades. It is an integral of the venture capital/financing business model. A profitable exit is buttressed by the demand for the firm’s shares. This is why executives do presentations at investor conferences, emerging technologies symposia, etc. It doesn’t mean that anyone is doing anything untoward. It just means that it is very rare that the timing is right for a long investment in a firm at this stage of its corporate life. This is precisely why retail investors should avoid IPO’s, for example. Every new issue is overpriced right out of the blocks and a credible support level has not been determined yet. Poor timing.

Your “90% of the total capital raised” comment sounds, pardon me, quite naive. My point is the substantial pound of financial flesh that early investors, VC’s, investment bankers take for their involvement with an early stage company. Academics routinely state that this is fair compensation for the risks taken. All I know is that it is the cost of doing business and the cost of doing a financing deal with these entities. It ain’t cheap. ONVO’s take via the warrants does not reflect the total capital raised (based on the market price of a share). It is ONVO’s proportion of the total. The other stakeholders/investors got the rest. You may recall that Google (http://bit.ly/I2oi2V) totally bypassed the investment bankers in its IPO by offering shares via a Dutch auction. This enabled it to raise almost all the capital for its own use. This is the way it should be, should it not? Instead, there is an enormous cut taken by the financiers when companies access the capital markets. It is the cost of going public. Small firms don’t possess a thimble-full of the muscle necessary to go it alone. This, again, typically means that the timing is poor for a long position. The financiers have to exit, the market has to establish a sustainable demand for shares and the company needs to deliver the caliber of fundamental results that justify acquiring shares. Retail investors must be patient.

You discount the planned exit by 190 shareholders. The only comment I have in response is that you have no business managing your own investments (if this is what you do) if you do not see the significance of this information. It may be prudent for you to stick with index funds or index-linked ETF’s.

Your comment re “shady real estate types” also misrepresents my statements. Nowhere in my article do I impugn anyone’s integrity. The point I was making with the RERR section was that it had no value other than to a reverse merger suitor. The principals involved in the business just appeared to be inexperienced and ill prepared for the venture based on the information in the S-1.

And, lastly, I do not have a short position in ONVO nor do I have an advisory service or any other relationship where I would profit from the behavior of ONVO’s stock. My article is a follow on piece to my earlier submission re regenerative medicine.]]> http://seekingalpha.com/article/1436261/comments?source=feed#comment-18882321 18882321 Thu, 16 May 2013 00:19:35 -0400 http://seekingalpha.com/article/1436261/comments?source=feed#comment-18882041 18882041 Thu, 16 May 2013 00:09:05 -0400 http://seekingalpha.com/article/1436261/comments?source=feed#comment-18881821 18881821
The 2x - 3x statement comes from Mr. Murphy's presentation. I'll go back and relisten to see if I misinterpreted his comments.]]> Thu, 16 May 2013 00:03:20 -0400
The 2x - 3x statement comes from Mr. Murphy's presentation. I'll go back and relisten to see if I misinterpreted his comments.]]> http://seekingalpha.com/article/1436261/comments?source=feed#comment-18881511 18881511 Wed, 15 May 2013 23:49:35 -0400 http://seekingalpha.com/article/1436261/comments?source=feed#comment-18881401 18881401
The uplisting will happen. Whatever needs to be done to accomplish this will be done. The thing to look for once the listing is live, is institutional buy-in. If robust, then it bodes well for share price appreciation. This seems doubtful, though, because the market currently has a "show me the money" mentality. For example, Neuralstem (CUR) still sports a tiny market cap ($88M) despite impressive PI results in ALS patients. This tells me that the market still perceives substantial uncertainty vis a vis cell therapy despite concrete results with a pernicious disease. ONVO still lacks concrete results so I would be surprised if the institutions jump in this early.]]> Wed, 15 May 2013 23:45:16 -0400
The uplisting will happen. Whatever needs to be done to accomplish this will be done. The thing to look for once the listing is live, is institutional buy-in. If robust, then it bodes well for share price appreciation. This seems doubtful, though, because the market currently has a "show me the money" mentality. For example, Neuralstem (CUR) still sports a tiny market cap ($88M) despite impressive PI results in ALS patients. This tells me that the market still perceives substantial uncertainty vis a vis cell therapy despite concrete results with a pernicious disease. ONVO still lacks concrete results so I would be surprised if the institutions jump in this early.]]> http://seekingalpha.com/article/1436261/comments?source=feed#comment-18865581 18865581
It sounds like you have confidence in management and are satisfied with your investment. Good for you. The point of my article to look closely at what has occurred from a retail investor's prospective. The ultimate question is: Is now the right time to buy? It sounds like you got in earlier and have a nice gain from your basis. If so, you have more leeway with the share price behavior than someone looking to buy now. As far as ONVO goes, I will watch to see if it can build its business in a meaningful way. If several multi-million dollar deals are closed with big pharma in the next 3-6 months, then this bodes quite well for its value proposition. I want to see some significant uptake for its products/services before considering a long position.

And finally, I want to say that I do not perceive anything untoward from ONVO management. Their presentations, public disclosures, etc. are all factual, realistically positioned and devoid of the "we will be worth billions!!!-type" hyperbole that one encounters with other micro cap life science firms. The reflects well on their credibility and integrity.]]> Wed, 15 May 2013 16:09:18 -0400
It sounds like you have confidence in management and are satisfied with your investment. Good for you. The point of my article to look closely at what has occurred from a retail investor's prospective. The ultimate question is: Is now the right time to buy? It sounds like you got in earlier and have a nice gain from your basis. If so, you have more leeway with the share price behavior than someone looking to buy now. As far as ONVO goes, I will watch to see if it can build its business in a meaningful way. If several multi-million dollar deals are closed with big pharma in the next 3-6 months, then this bodes quite well for its value proposition. I want to see some significant uptake for its products/services before considering a long position.

And finally, I want to say that I do not perceive anything untoward from ONVO management. Their presentations, public disclosures, etc. are all factual, realistically positioned and devoid of the "we will be worth billions!!!-type" hyperbole that one encounters with other micro cap life science firms. The reflects well on their credibility and integrity.]]> http://seekingalpha.com/article/1436261/comments?source=feed#comment-18864511 18864511
ONVO plans to apply for an exchange listing this summer, probably NASDAQ. This clearly expands the population of potential investors. I would watch for institutional buy-in, specifically the number of mutual funds establishing a position.

I think you are misinterpreting the 99.7% figure. This means that it is almost a complete cash out by 190 shareholders. The timing of the sales are up to them so, if they're in not a panic, they will sell shares over time in order to avoid upsetting the market. My point is that, if the future is bullish, why are some many investors selling? I look at what people do, not what they say.

ONVO's piece is on http://bit.ly/10RkFUf. You have to join (it's free) to gain access to Mr. Murphy's presentation. ]]> Wed, 15 May 2013 15:52:29 -0400
ONVO plans to apply for an exchange listing this summer, probably NASDAQ. This clearly expands the population of potential investors. I would watch for institutional buy-in, specifically the number of mutual funds establishing a position.

I think you are misinterpreting the 99.7% figure. This means that it is almost a complete cash out by 190 shareholders. The timing of the sales are up to them so, if they're in not a panic, they will sell shares over time in order to avoid upsetting the market. My point is that, if the future is bullish, why are some many investors selling? I look at what people do, not what they say.

ONVO's piece is on http://bit.ly/10RkFUf. You have to join (it's free) to gain access to Mr. Murphy's presentation. ]]> http://seekingalpha.com/article/1436261/comments?source=feed#comment-18863251 18863251 Wed, 15 May 2013 15:31:40 -0400 http://seekingalpha.com/article/1436261/comments?source=feed#comment-18847751 18847751 Wed, 15 May 2013 10:22:42 -0400 http://seekingalpha.com/article/1355621/comments?source=feed#comment-18180401 18180401 Sat, 27 Apr 2013 21:24:57 -0400 http://seekingalpha.com/article/1355621/comments?source=feed#comment-18180361 18180361 Sat, 27 Apr 2013 21:20:20 -0400 http://seekingalpha.com/article/1355621/comments?source=feed#comment-18170551 18170551
As of December 31, 2012, we had received aggregate payments of $78.5 million from Pfizer, consisting of a $30.0 million non-refundable upfront cash payment, $17.5 million in reimbursed research and development expenses relating to licensed products, $6.0 million in fees relating to Pfizer’s exercise of its option to license an undisclosed immediate-release opioid analgesic tablet product and hydrocodone bitartrate/acetaminophen tablets, a $5.0 million milestone fee relating to our successful achievement of the primary endpoints for our pivotal Phase III clinical study for Aversion oxycodone HCl with niacin tablets and a $20.0 million milestone fee relating to the FDA’s approval of the Oxecta Tablets NDA. We can also receive a one-time $50 million sales milestone payment upon the first attainment of $750 million in net sales of Oxecta across all Pfizer Territories. In addition, for Oxecta sales occurring on and following February 2, 2013 (the one year anniversary of the first commercial sale of Oxecta), Pfizer will pay us a royalty at one of six rates ranging from 5% to 25% based on the level of annual net sales for Oxecta across all Pfizer Territories, with the highest applicable royalty rate applied to such annual sales.

The 5% - 25% royalty rate explains why the OTC manufacturers lack enthusiasm for reformulating their products with ACUR's technology. There is already intense competition from generics so a royalty burden anywhere near 25% would be a margin killer.]]> Sat, 27 Apr 2013 11:39:10 -0400
As of December 31, 2012, we had received aggregate payments of $78.5 million from Pfizer, consisting of a $30.0 million non-refundable upfront cash payment, $17.5 million in reimbursed research and development expenses relating to licensed products, $6.0 million in fees relating to Pfizer’s exercise of its option to license an undisclosed immediate-release opioid analgesic tablet product and hydrocodone bitartrate/acetaminophen tablets, a $5.0 million milestone fee relating to our successful achievement of the primary endpoints for our pivotal Phase III clinical study for Aversion oxycodone HCl with niacin tablets and a $20.0 million milestone fee relating to the FDA’s approval of the Oxecta Tablets NDA. We can also receive a one-time $50 million sales milestone payment upon the first attainment of $750 million in net sales of Oxecta across all Pfizer Territories. In addition, for Oxecta sales occurring on and following February 2, 2013 (the one year anniversary of the first commercial sale of Oxecta), Pfizer will pay us a royalty at one of six rates ranging from 5% to 25% based on the level of annual net sales for Oxecta across all Pfizer Territories, with the highest applicable royalty rate applied to such annual sales.

The 5% - 25% royalty rate explains why the OTC manufacturers lack enthusiasm for reformulating their products with ACUR's technology. There is already intense competition from generics so a royalty burden anywhere near 25% would be a margin killer.]]> http://seekingalpha.com/article/1355621/comments?source=feed#comment-18169821 18169821
And what about the article's statement re the pseudoephedrine ban in Mexico? Well, let's just say I wouldn't put too much credence in it. The overwhelming majority of illicit drugs still come into the US via our neighbors south of the border. Just because a reporter states that the purity has plummeted doesn't mean that it's so. I guarantee you that plenty of high quality meth is still manufactured there. We just don't hear about it. The business is much too large to let a government-sponsored raw material moratorium get in its way.]]> Sat, 27 Apr 2013 11:13:14 -0400
And what about the article's statement re the pseudoephedrine ban in Mexico? Well, let's just say I wouldn't put too much credence in it. The overwhelming majority of illicit drugs still come into the US via our neighbors south of the border. Just because a reporter states that the purity has plummeted doesn't mean that it's so. I guarantee you that plenty of high quality meth is still manufactured there. We just don't hear about it. The business is much too large to let a government-sponsored raw material moratorium get in its way.]]> http://seekingalpha.com/article/1355621/comments?source=feed#comment-18158081 18158081 Fri, 26 Apr 2013 21:03:15 -0400 http://seekingalpha.com/article/1355621/comments?source=feed#comment-18157911 18157911 Fri, 26 Apr 2013 20:49:52 -0400 http://seekingalpha.com/article/1355621/comments?source=feed#comment-17879161 17879161
The retail side of things won't come to much because Nexafed will compete for shelf space against well-established well-entrenched national brands. If customers come into the store to buy an anti-histamine and have a brand decision in mind, that's what they will get. This is the weakness in Acura's retail strategy. It is relying on pharmacists to sell its product based on its abuse deterrent characteristics with the only incentive being their anti-drug abuse opinion. This won't be enough. There needs to be a financial incentive as well. The vast majority of Sudafed purchasers are regular folks, ones with colds, not meth cooks. The pharmacists will only sell Nexafed up to a (modest) point. They won't forego a sale by refusing to sell Sudafed to a customer who wants it. Here's the way the conversation might go:

Customer: "I'd like a box of Sudafed please."
Pharm: "Have you tried Nexafed? It's just as good but can't be easily converted into methamphetamine."
Customer: "That's nice to know, but I have a cold. I've had good luck with Sudafed so I'll just stick with that."
Pharm: "Let me get that for you."

To displace the well-entrenched national brands Acura will need a world-class commercial strategy to be successful. Relying on pharmacists to do the job with no real incentive ain't the way.

If I were going long or considering to go long, I would concentrate in Acura's licensing success. With a reasonable royalty rate and a few big closes, it would be worth a close look.]]> Sat, 20 Apr 2013 16:01:03 -0400
The retail side of things won't come to much because Nexafed will compete for shelf space against well-established well-entrenched national brands. If customers come into the store to buy an anti-histamine and have a brand decision in mind, that's what they will get. This is the weakness in Acura's retail strategy. It is relying on pharmacists to sell its product based on its abuse deterrent characteristics with the only incentive being their anti-drug abuse opinion. This won't be enough. There needs to be a financial incentive as well. The vast majority of Sudafed purchasers are regular folks, ones with colds, not meth cooks. The pharmacists will only sell Nexafed up to a (modest) point. They won't forego a sale by refusing to sell Sudafed to a customer who wants it. Here's the way the conversation might go:

Customer: "I'd like a box of Sudafed please."
Pharm: "Have you tried Nexafed? It's just as good but can't be easily converted into methamphetamine."
Customer: "That's nice to know, but I have a cold. I've had good luck with Sudafed so I'll just stick with that."
Pharm: "Let me get that for you."

To displace the well-entrenched national brands Acura will need a world-class commercial strategy to be successful. Relying on pharmacists to do the job with no real incentive ain't the way.

If I were going long or considering to go long, I would concentrate in Acura's licensing success. With a reasonable royalty rate and a few big closes, it would be worth a close look.]]> http://seekingalpha.com/article/246783/comments?source=feed#comment-17353861 17353861 Mon, 08 Apr 2013 10:30:34 -0400 http://seekingalpha.com/article/1273961/comments?source=feed#comment-16566821 16566821 http://1.usa.gov/16K2m9D]]> Wed, 20 Mar 2013 16:13:00 -0400 http://1.usa.gov/16K2m9D]]> http://seekingalpha.com/article/1262751/comments?source=feed#comment-16336371 16336371 Fri, 15 Mar 2013 13:48:43 -0400 http://seekingalpha.com/article/1276651/comments?source=feed#comment-16335871 16335871
I love it when I see a nano cap CEO spew numbers in the billions. Great entertainment. Superb BS. This company reminds me of Trovagene (TROV). It's a sexy story with a lot of hype. Caveat emptor.]]> Fri, 15 Mar 2013 13:38:24 -0400
I love it when I see a nano cap CEO spew numbers in the billions. Great entertainment. Superb BS. This company reminds me of Trovagene (TROV). It's a sexy story with a lot of hype. Caveat emptor.]]> http://seekingalpha.com/article/1273961/comments?source=feed#comment-16327901 16327901
The whole HUD angle reeks of opportunism by NVIV's CEO in an attempt to circumvent the PMA process. I guess, on occasion, a winning lottery ticket can be purchased, but I don't see it here. The "device" moniker is ridiculous anyway. ]]> Fri, 15 Mar 2013 11:08:15 -0400
The whole HUD angle reeks of opportunism by NVIV's CEO in an attempt to circumvent the PMA process. I guess, on occasion, a winning lottery ticket can be purchased, but I don't see it here. The "device" moniker is ridiculous anyway. ]]> http://seekingalpha.com/article/1273961/comments?source=feed#comment-16303111 16303111 Thu, 14 Mar 2013 19:40:30 -0400 http://seekingalpha.com/article/1273961/comments?source=feed#comment-16302521 16302521
The HUD designation is a pipe dream, in my view. Although, I agree that it doesn't hurt to try. The FDA does occasionally surprise everyone with unexpected approvals. Without this, FDA clearance is a decade or more away.]]> Thu, 14 Mar 2013 19:21:38 -0400
The HUD designation is a pipe dream, in my view. Although, I agree that it doesn't hurt to try. The FDA does occasionally surprise everyone with unexpected approvals. Without this, FDA clearance is a decade or more away.]]> http://seekingalpha.com/article/1253131/comments?source=feed#comment-16044441 16044441
The number 93 does serve a purpose, though. It's an anchor. When people see a number, regardless of its validity, it influences their subconscious. Psychologists have studied this phenomenon rather extensively. In a typical experiment, study subjects are given the task of estimating something (age of an artifact, value of an object, etc.). Before providing their estimate researchers say a number. The subjects who hear a low number consistently estimate a lower number than those subjects who hear a high number. The bias is generally in the 10-20% range.

Ultimately, the $93 figure Mr. Simpson calculates is counterproductive. It actually has a negative value for investors because of the anchoring characteristic and because of the aforementioned heroic assumptions. No one on the planet can predict the future. The true value of HTWR could be $3 or $393. Unfortunately, there no way credible way to determine a company's value except retroactively. There are too many variables affecting a firm's NPV. Once the number of variables exceeds a small handfull, all these valuation models break down.

The best approach is to do your own research. ]]> Fri, 08 Mar 2013 14:13:26 -0500
The number 93 does serve a purpose, though. It's an anchor. When people see a number, regardless of its validity, it influences their subconscious. Psychologists have studied this phenomenon rather extensively. In a typical experiment, study subjects are given the task of estimating something (age of an artifact, value of an object, etc.). Before providing their estimate researchers say a number. The subjects who hear a low number consistently estimate a lower number than those subjects who hear a high number. The bias is generally in the 10-20% range.

Ultimately, the $93 figure Mr. Simpson calculates is counterproductive. It actually has a negative value for investors because of the anchoring characteristic and because of the aforementioned heroic assumptions. No one on the planet can predict the future. The true value of HTWR could be $3 or $393. Unfortunately, there no way credible way to determine a company's value except retroactively. There are too many variables affecting a firm's NPV. Once the number of variables exceeds a small handfull, all these valuation models break down.

The best approach is to do your own research. ]]> http://seekingalpha.com/article/1216761/comments?source=feed#comment-15768661 15768661 Sun, 03 Mar 2013 13:28:44 -0500 http://seekingalpha.com/article/1216761/comments?source=feed#comment-15688521 15688521 Fri, 01 Mar 2013 11:01:15 -0500