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Here's What's Driving The Action In BioLife Solutions Inc (NASDAQ:BLFS)

Here's What's Driving The Action In BioLife Solutions Inc (NASDAQ:BLFS)
Written by
Chris Sandburg
Published on
July 6, 2017
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BioLife Solutions Inc (NASDAQ:BLFS) is up nearly 25% on its end of the week close last week, currently trading for just shy of $3 a share and a market capitalization of $41.4 million. The driving force behind the run is an announcement related to an existing credit facility held by the company and the amending of the terms of said facility in such a way that seems pretty favorable from a shareholder perspective.Here is a look at the announcement in question and what we expect next from BioLife.So, as mentioned, the announcement relates to a credit facility and, specifically, a $4.25 million facility held with an entity called WAVI Holding AG. As per the agreement, BioLife has exchanged its existing $4.25 million credit facility, including principal and accrued interest outstanding as of June 1, 2017, for 4,250 shares of its Series A preferred stock. The stock has a fixed, aggregate stated value of $4.25 million (accounting for the entire outstanding debt) and it has been structured in such a way that conversion minimizes dilution for shareholders going forward.That's important, as the potential for dilution has weighed on BIoLife for some time. The company fell short of NASDAQ requirements from a shareholder equity perspective, and the resolution of this falling short might have brought with it some serious dilution on existing holdings.Instead, however, with the just announced WAVI agreement, the preferred shares are not convertible into any other form of equity and can only be redeemed at the stated value of $4.25 million at times (and in amounts) solely determined by BioLife. Additionally, the company has stated alongside the issue that it intends to redeem the preferred stock at the stated value of $4.25 million over the next five years through the utilization of cash flow generated by operations. In other words, there aren’t going to be any capital raises carried out purely to meet the preferred stock conversion requirements – another bonus for shareholders.It's important to recognize that at this end of the biotechnology space, companies' disregard for shareholders and shareholder concerns is not uncommon. As such, when a company like BioLife executes on a transaction like this, which, while positive for the company, is a strong demonstration that management has shareholders in mind, it doesn't go unnoticed. It's for this reason that the company is gaining strength to the degree that is, even though the announcement (while relieving some potential for dilution) isn't particularly game changing in the grand scheme of things.So, what's next?Well, for those not familiar with this company, BioLife creates and sells biopreservation and storage/shipping type containers for cells, tissues, and organs. When a donated organ travels from one hospital facility to another, for example, it needs to be stored and packaged correctly and BioLife provides the materials necessary to meet this necessity. The company's business model is rooted in securing long-term agreements with third parties, which see the latter utilize the former's technology in its operations. We just got an example of one such agreement back on June 14, when BioLife announced a deal with Adaptimmune Therapeutics PLC – ADR (NASDAQ:ADAP), which will see BioLife provide the storage equipment for the T cells that underpin Adaptimmune's development pipeline.As such, going forward, we are looking for any indication of how this agreement might play into top line (we don't yet know the numbers associated with the agreement) as well as any further deals of this type hitting press.Bottom line here is that, regardless of how thick and fast near-term upside drivers come, the latest development has both served to lift some downside pressure from the company and to demonstrate that management has shareholder interests in mind when it makes decisions. Both of these things are contributing to near-term strength, but should also serve to compound the impact of any positive news as and when it hits longer term.We will be updating our subscribers as soon as we know more. For the latest updates on BLFS, sign up below!Image courtesy of NIAID via FlickrDisclosure: We have no position in BLFS and have not been compensated for this article.

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