Northwest Bio (NWBO) Converts $11.6 M Debt To Cognate Bioservices
Long/Short Equity, Special Situations, Contrarian
Seeking Alpha Analyst Since 2009
Conversion Shares Also Subject To 18-Month Lock-Up Agreement
(NWBO agreed to convert the $11.6 M of accounts payable to Cognate into shares of NW Bio common stock at a price of $4.00 per share. These conversions cover accounts payable from Q4 2012 through July of 2013.
To assure that these shares will not be a factor in the market for an extended period of time, the NWBO and Cognate entered into a lock-up agreement to an 18-month lock-up of these conversion shares. On a going forward basis, NW Bio and Cognate agreed to establish a regular ongoing arrangement for payment of at least half of each invoice in stock, and the remainder in cash, at $4.00 per share. The arrangement will continue until terminated by mutual agreement.
The Bottom Line: A good but, <inter-company> deal … for the balance sheet but, maybe not the dilutionary affect. Cognate has provided manufacturing and regulatory assistance to NW Bio in the US since 2004, in Israel since 2008 and in Europe since 2010. Interesting … Cognate shares common ownership with NW Bio (by Toucan Capital), and as such is an affiliate of NW Bio under the securities laws. NWBO reduces its cash burn while building its operations in Europe as well as the US; while pursuing 2 major clinical programs (both DCVax-L and DCVax-Direct) simultaneously.
NWBO closed at $3.59 and is DOWN in the pre-market -$0.13 to $3.46. It will probably bottom-out at $3.25. NWBO had a float of 16.33 m shares and an outstanding share count of 30.1 M. I won't rate it with this event until it settles into a new-normal trading activity.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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