SNT 5.00% 2.1¢ syntara limited

Reading some of the earlier posts on this thread it seems that...

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    Reading some of the earlier posts on this thread it seems that many punters are assuming either that (1) some 'insiders' already know that Boehringer have already decided not to take up the option and are selling accordingly, or (2) the market always predicts these things accurately, and the fact that sp is falling means that the "smart money" think that Boehringer are unlikely to exercise the option.

    Just want to point out that the probability of an existing PXS shareholder having a 'connection' inside (German based) Boehringer who is willing to risk goal in order to provide the shareholder with information about this option is virtually zero. The stakes are just too low to motivate such blatant illegal behavior.

    Given that PXS has a market cap of only $50mill, $23mill in cash, is cutting costs, has no repayable debt, and has growing Bronchitol sales revenue, a negative decision from Boehringer is unlikely to see much of a sell off.

    Also, if you look at share price movement leading up to recent pivotal announcements re other Aust biotechs, 'the market' gets it wrong far more often than it gets it right. In other words, over recent years, you would be far better off betting against the market leading up to a pivotal biotech announcement than following the sheep.

    In my view, the most sensible way to think about the Boehringer option at the present point in time is to assume that there is a 50% probability of it being exercised.

    If the option is excercised, PXS will have in excess of $60mill in cash in the context of an attractive pipeline, rising Bronchitol sales, falling costs, and with more PXS4728a milestone payments to come. On this basis, if the option is exercised (50% probability) I think a 40c share price in the near future is not out of the question.

    Given that this option agreement is not a binary event (such that the sense that the sp fall will be limited with a negative decision from Boehringer), the risk/reward equation looks attractive at the present point in time.
 
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