-Resigning not an option in the middle of Federal Investigations.
-Not much skin in the game, all free shares from Jan 5, 2012 should be taken away.
-Legal proceedings can't be pleasant, even though it's on company dime.
-Bankruptcy probably ends most of the liability of the class actions.
-BOD probably wants this to end ASAP. Bankruptcy achieves that goal.
I agree completely. At the current burn rate, it would take 6 quarters to go thru all the money. They will reduce the burn by $20M, but have a huge cost of over $100M to do so,which puts the countdown to zero in the same place.
While they are the same time from zero cash, they are now just one quarter from the auditors declaring they are not a going concern. (Very devious that restructuring). That and a price below $5/share will mean all funds have to dump it.
With the reduced losses and the writedown, it's still 6 quarters to bankruptcy, but the BoD wants it faster. How to get there?
They can probably squeeze the restructuring costs up to $150M, maybe even $200M if they work it. Beyond $200M, it's just way too obvious what they are up to. They still have lots of unfilled sales slots, so they should be able to drive sales down to $60-70M. So, they will be able to keep losses up in the $80M/qtr range without difficulty. If they start up Euro sales, it will cost $100M to finish all the certs for the drug and facility. They can probably lose another $20M/qtr in Europe once they get going, but they will get the doors closed before they can sell there.
It's going to be tricky getting rid of all the money before the end of the year.
They might have a trick up their sleeve. The bondholders can call them when the auditors declare it's not a going concern (that's just a quarter away). The bondholders might stop it all down when there was still $250M left and sell the rights to Provenge to get the rest. So, they'd come out whole and the shareholders (as you point out, there are none of those on the board anymore) get squat.
It's going to be interesting to see how they manage bankruptcy that quickly, but make it look like they aren't trying. But, this is the company that screwed up the clinical trial (with Frovenge and by only getting it approved when it is too late to be of maximum value), built 3 facilities when they needed one or could have contracted to have the stuff made for another year, manages not to have a sales force, released guidance that was higher than their capacity to manufacture the drug, ..... Don't discount their ability to shove $100M some direction and make it look like business as usual. They've done it so many times, it will be business as usual.
I'm going to be fascinated to watch how they do it. It will be a biz school case study for many years to come.
