Will the SPA have any influence on the [share price] at all?The SPA should have a significant influence on the share price.
The premise is simple. Receive an SPA, and certain life sciences-focused investors will buy stock. This has been the observation of my anecdotal due diligence on this topic,and what I believe is management's own perspective. From Friday's closing price of $0.71 and a market capitalization of, per Google Finance, about $80MM, the SPA, which thus paves the regulatory path for PV-10 to be approved primarily as a local-regional treatment, should spur some life sciences-focused and a good number of generalist professional and retail investors to jump into a stock whose market capitalization they could see as multi-hundreds of millions of dollars (i.e., $2-3 per share).
A positive outcome (i.e., closer to or in excess of $2 per share), however, is not so simple.
First, is supply too much? Weighing down the flight of the share price are:
- The [purported] remaining selling of Dr. Adams' shares. It has been speculated, I think on the Yahoo! Finance Provectus board, that this figure is about 2 million shares.
- Profit taking by some investors. The amount of profit taking will increase as the share price approaches $2. Many retail investors who have been underwater on their holdings for some time very likely will sell if their respective cost bases are exceeded by 20-30%. I guess several million shares will come to market as we near $2; and
- Warrant exercising into common stock that are then sold rather than held: As at 12/31/12, ~12MM at $0.95 and $1.00, ~4MM at $1.12, ~5MM at $1.25 and ~3MM at $1.50. Not taking into account the adjustment for cashless exercises, etc., this is about 25MM shares that would be $0.50 to more than $1 in-the-money as the share price approaches $2.
Second, is demand enough?
- Some life sciences-focused investors may be constrained by fund criteria that prevents the purchase of the stock while it is an over-the-counter stock. After a minimum $2 closing price after 5 days, followed by the transition of the PVCT ticker to the NASDAQ, they should jump in, too.
- Some investors will wait until the share price exceeds $5 before their fund criteria permits then to buy stock; and
- Despite the receipt of the SPA, other life sciences-focused investors will wait for the second release of Moffitt murine study work and/or the first release of Moffitt human study work before they too will buy shares. This also, I believe, is management's perspective.
But the first portion of the share price ascent surely will be tested.