Luke Puplett

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Luke Puplett
Posted over 1 year ago
How can this idea be brought to reality?
Denise, buying shares in a Pharma company does not provide the company any extra capital in the secondary market. A company raises capital from shares only on its Initial Public Offering, by selling part of the company to investors, each share representing a tiny slice of the company, or more accurately, a share of the profits (the dividend). The number of issued shares x initial value = the capital raised for the company to spend how it wants, in ways that its new shareholders will best benefit. It's important to note that when a company floats, it serves the shareholders. This may be the reason that the Pharmas are not choosing to develop these shelved compounds; management are at the mercy of money-men who may not share the same ideals or motives as the original founders. When you buy a share on the secondary market, i.e. not at IPO, you are buying from another shareholder. In the same way, buying a second hand car does not make any money for the original manufacturer. The company can issue more shares to raise more money in what's called a Rights Issue, but various dilution issues make this unattractive. Bonds are often issued by companies to raise capital from the public/financial markets and are a form of borrowing with interest. A company may do this to fund a particular project. Roger, if I understand correctly, is proposing a vehicle that buys the drugs from the Pharma company and develops them, paying interest along the way by selling some of the drugs that have passed some testing stages and have less risk and a higher value, presumably back to Pharma companies*. In a sense, it is a small Pharma company with the soul remit to work on compounds that are not being touched while being disencumbered from boosting its share price and future prospects, to the contrary, it has an 'end date' allowing it to focus on a single mission. *I guess there's a market for such assets, much like prospecting land and reselling it. Luke