Genvec Inc (NASDAQ:GNVC)

CAPS Rating: 1 out of 5

A biopharmaceutical company, which develops novel gene-based therapeutic drugs and vaccines.


Player Avatar zzlangerhans (99.85) Submitted: 10/10/2013 8:22:41 PM : Underperform Start Price: $1.40 GNVC Score: -32.24

What's been going through the minds of GenVec management this year? Are they trying to find excuses to keep the company running until they've paid themselves every last cent of remaining cash? Are they playing games with the share price to benefit insiders? Or are they simply incompetent, clueless and vacillating?

In May, the company filed a form 8K indicating they would liquidate the company and return the remaining assets to shareholders. Considering there was 12M in cash at that time, that could have resulted in a substantial return to remaining shareholders. The share price had crashed in dramatic fashion well prior to that filing without any clear catalyst, indicating that selected parties had been made privy to insider information about the plan for liquidation.

In June, GenVec filed another 8K stating that they would halt the plan for dissolution, having received several unspecified proposals for transactions which could result in additional cash returned to shareholders. The share price spiked back up.

In August, GenVec issued another 8K stating that after considering the proposed transactions " the Board of Directors unanimously concluded that proceeding with seeking stockholder approval for the Plan of Dissolution, and receiving that approval, continued to be in the best interests of the Company and the Company's stockholders. The Board of Directors viewed the ability of the counterparties to complete the proposed transactions, in a timely manner, if at all, as extremely risky, the prospects for preserving value as very uncertain and the likelihood of receiving significant consideration in an asset sale as unlikely. Accordingly, if the Company were to continue to pursue one or more of these proposals, the Board of Directors was concerned that the Company's assets will continue to decline to a point where the Company can no longer meet its obligations with no guaranty that a transaction can be completed."

That didn't sound very good at all. The share price dropped as low as 0.27. I do remember the stock being rather tempting at that point, but since I'd already been burned once I decided to just watch. Bad choice.

In September, the company decided once and for all to withdraw the plan of dissolution and return to the pursuit of the collaboration with Novartis along with whatever other woolgathering they had only recently decided was completely hopeless. Instead of greeting the news with skepticism, the market embraced the plan sending the share price as high as 1.8, a 566% gain over recent lows. That also lifted the market cap to almost 24M, giving GenVec a sudden enterprise value of 15M instead of the negative enterprise value they had for more than a year. The recently-hired CEO was also unceremoniously booted out, to be replaced by the long-term CFO.

Power struggle? Cash play? Stock manipulation? Who knows? I doubt there's anyone out there of sound mind who believes in GenVec from an operations point of view. At this point it's all speculation, and I don't think it will turn out very well for a lot of the people bidding up the share price. I've borrowed 10000 shares with a cost basis of 1.48, and if my thesis is correct I'll be buying them back close to zero.

Report this Post 4 Replies
Member Avatar sidiling (97.06) Submitted: 10/10/2013 10:25:08 PM
Recs: 0

good luck. entertaining read as always.

on a separate note, how is BARDA impacted by sequestration and or gov shutdown?
in regards to SIGA>

Member Avatar zzlangerhans (99.85) Submitted: 10/11/2013 12:28:29 AM
Recs: 3

No clue, really. Since these are political phenomena and therefore unpredictable, the only reasonable strategy is to limit exposure. Just another layer of chaos on top of the court case. I won't be increasing my Siga position any time soon. I'm just going to let it ride for now and see what cash finds its way into company coffers.

Member Avatar EvanBuck (99.84) Submitted: 12/12/2013 10:45:54 AM
Recs: 0

What's your take on the huge jump 12/12/13? More chicanery from the company or pumpers??

Member Avatar EvanBuck (99.84) Submitted: 12/12/2013 10:46:25 AM
Recs: 0

What's your take on the huge jump 12/12/13? More chicanery from the company or pumpers??

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