Vical announced this morning a private placement of $22.2M in stock priced at $4.80 per share. The price is based on a 30 day average of closing prices, which unfortunately for those of us who bought in yesterday, was way below recent price action, causing about a 15% decline in value of our VICL holdings today.
What to do?
I doubled up my VICL positions today, bringing my average cost basis down. My thinking is that despite the drop in stock price, that this is longer term good news for VICL which is increasingly in the forefront of vaccine technology. The money bolsters VICL already strong balance sheet and the offering was sold out, meaning the deep pocketed institutional investors jumped at the opportunity to add to their holdings. In other words, my timing was off by one day, but my underlying analysis remains bullish, if not more so.
This also highlights the advantage of a basket approach in ideas like Avian flu and biotechnology stocks in general. Although a 15% haircut hurts like hell, it's more or less a paper cut, having minimal effect on our basket as a whole.
Anyway, when NNVC hits $10 a share, none of this will matter.