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My greatest fear with the authorized shares and blank check preferred was that any money raised from their issuance would eventually funnel back into management's and the Board's bank accounts.
Given the recent slate of good news, however, I am starting to agree that it's more likely these actions were taken to prevent a hostile takeover.
I'd love to see the total number of authorized shares never reach more than 100mm. Raising $50 million against 2.4 million shares may give Anavex enough of cash runway to start generating revenue before full dilution becomes an issue.
"You don't do a direct offering and then release bad news!!"
Well, sometimes you may do that if you're not concerned about the long-term. If it's a matter of duping investors or running out of cash, some CEOs will operate under the assumption that investors are a dime-a-dozen.
For the record I am not saying that the offering implies bad news or that Dr. Missling doesn't care about the shareholders. I'm slowly warming to some of his business decisions, including the additional authorized shares, the blank check preferred shares, etc.
I believe this was Dr. Missling being conservative for a single inning of a game that he's aggressively playing to win. Sometimes you have to bunt to advance a runner to the next base. Raising $50mm for just 2mm shares gives the company a sufficient cash runway to do many interesting things, from building an internal manufacturing and marketing infrastructure to funding a new trial for a new disease (autism or epilepsy?) to advancing A371 into a P2 trial.
I also understand how people can wonder, "In light of all this seemingly good news, why raise money now when you can wait a few months and raise at an even better valuation?" And I think the most likely answer is that Dr. Missling has found himself in a situation where he's got a runner on 2nd base, no outs, so why not play it conservative and take the money while it's available?
(Sorry for the baseball analogies, I just finished watching last night's Reds game)
It's 2015. You're the CEO of a small biotech with a promising new drug that just aced its P1 safety trial, and has about a month of data showing the potential for efficacy. You have a long and arduous road to figure out trial designs and dosages and method of drug delivery, etc.
Who would you rather have on your Board: Elliot Favus or Jiong Ma?
It's 2021. Your P3 trial design has been approved and is nearly fully enrolled. You have years of data indicating the drug is safe and effective. The FDA's only remaining major role is to approve or reject based on the trial results.
If A273 is effective, there will undoubtedly be interest from larger firms interested in a partnership or acquisition. The other option is to try and grow Anavex into something much larger and eventually try to become a major player in the sector.
Now who would you rather have on your Board of Directors:
Elliot Favus or Jiong Ma.
She brings value to Anavex at this stage in its growth cycle, just as Dr. Favus brought value when Anavex had a more urgent need to understand how the FDA operates.
How much value remains to be seen...
(P.S. -- the energy sector is full of mergers and acquisitions)
That's a good question. It's possible it holds $11 again. My feeling is that people were more optimistic about the economy then with people expecting the next round of stimulus money. Now that that money has been paid out, people aren't sure what's next and there is still a lot of trepidation in the market. I think $8 - $10 is probably a fair range for Avanvex at the moment, considering it has yet to earn a dollar in revenue. Obviously that will change with the next round of data results. So for me, under $8 is where I start to see the stock as being undervalued.
Good luck! I think your $10.30 stink bids may fill.
I saw this post. I liked it. I fall into the category of investor who believes a stock price does not always represent its intrinsic value at any one point but over time it has a tendency to revert to the mean.
This is true when AVXL was $25 (overvalued) and $3 (undervalued). I think it's probably fairly valued for the time being, with the possibility of becoming something special with definitive data that's so good the FDA has no choice but to approve the drug for distribution.
Perhaps, but we've known about these catalysts for quite some time and the share price did nothing, despite all the evidence in the world that A-273 is safe and most likely, effective.
The timing with the Wall Street Bets / Reddit / SAVA explosion seems more likely to me to indicate that AVXL was an unexpected beneficiary. If investors truly placed such an emphasis on these near-term catalysts, I doubt the stock would have taken a 50%+ haircut between then and now.
There was a time not too long ago when Anavex holders would have LOVED to see $6/share. I think many have been spoiled because they're now used to seeing double digits even though it's only been 8 weeks since the unexpected share price increase.
Buy and hold, flip and reload, all the same to me. The drug either works or it doesn't and that's how I will choose to measure the quality of this high-risk wager.
I think $6-$8 is possible. The stock moved up on basically nothing, other than a lot of Reddit hype when literally everything was going up in Jan/February.
Now the hype is over, but not much has changed with Anavex's developments since Dec/Jan when the stock was trending in the $5-$6 range. I can easily see it bouncing off that area of support if it breaks $8. Big IF, but that's where I am placing my GTC stink bids.
Nice job.
The risk of selling all is that every day we are getting closer to results being released, and it's a big gamble that you won't be holding any shares when news takes this way past previous highs.
Now, if you aren't confident that data will be positive (and I have no idea what your opinion is of the pipeline), selling all and buying back later is an excellent strategy.
If the market tanks the way I think it will, there's a very good chance the stock price goes back into the mid-single digits.
I read a story the other day about a single-location deli with $35k revenue that went public and is worth over $100 million on paper. That tells me all I need to know about whether we're in a bubble, and I don't think AVXL will be spared if the market decides to correct itself as it's done hundreds of times in the past when bubbles have formed.
Fortunately none of that matters if the drug works and some other company is willing to pay $5-$10 billion for the rights to A273.
Nope. Good guess though but not the correct answer
Still here. Not posting often these days. Good luck to everyone who is still holding.
Selling out of the money puts is a relatively safe way to acquire AVXL for less than market value, if you think long term it will go up a lot. Worst case of bankrupty is always a possibility but looking less and less likely. More likely the price doesn’t drop enough to trigger the strike but you still collect the premiums.
It's going to retrace. Maybe not tomorrow, but my guess is that it will based on the closing action after hours. Longs are taking profits and shorts will pile in. Who is going to take the place of the profit takers?
At some point it needs to consolidate anyway so may as well get It over with. Stair step pattern is ideal.
Right now is an excellent time to sell covered calls if you think it's going to go down.
So far so good. I think we will see 7s barring any bad news or recurring dilution
Generally speaking, this signals dilution. At some point it should end, and we'll know in a few months what the total damage was. I always try to base my models on a fully-diluted basis, because its inevitable Anavex doesn't hit 100mm shares. With the blank check preferred shares voters approved a few years ago, the 100m authorization becomes more or less moot though.
Yes, there are companies with larger market caps whose stock is in the billions despite having only Phase 1 and Phase 2 trials. Lots of things in life are overvalued.
Looking at market cap without any revenue is a trader's game, not an investor's. In the long run, the market will determine once and for all Anavex's value. Lot of people believe it should be in the billions, and there are just as many naysayers who believe it's a worthless company. In another few years one side will be proven correct.
So far the evidence for Anavex looks promising. But anyone who at this stage says its a sure thing, and the only reason the stock price is so low is because of outside nefarious forces, isn't being honest and probably has his or her own motives and agenda. Aside from a lone Twitter account the other month, I haven't seen a single hit piece in years. Where's the evidence that a cabal exists as opposed to the stock action being the result of profit-taking and moving money to more imminent opportunities?
I also am hopeful that Anavex prevails in the end. I’m more cautiously optimistic than many here because I don’t feel we are out of the woods yet. We may have a clearer path out but until the primary endpoints are met in a Phase 3 trial, nothing is for certain. Not even Anavex.
And it’s this remaining uncertainty that is suppressing the stock price. It’s so easy for an executive to lose his or her job paying billions for a drug that isn’t proven yet. As long as big pharma is on the sidelines, Anavex will remain primarily a retail-driven stock. If/when we get approval is when conservative funds will want our shares.
There haven’t been hit pieces or multitudes of damaging tweets in recent years like in 2015/2016. Whatever remnants of the cabal exist today are a shell of its old self. The price action, up and down, is retail buyers and sellers betting on the remaining uncertainty.
Five years ago there were a few traders who used Adam Feuerstein to attack the stock. Those guys have all moved down. Anavex is trading exactly where it should be for an experimental drug with zero revenue and nothing that’s been approved yet. There is little demand for it right now because there’s no immediate path toward profitability. But there is absolutely no evidence that a cabal exists and is deliberately dropping the stock price in 2021. None whatsoever. Supply and demand however are forces at work. Currently the market makers have excess supply they’re trying to move. That’s going to suppress the price for a while. The next time there’s good news, demand will increase again. Basic economics is a much more likely explanation than unsubstantiated conspiracies.
There is no cabal.
Sounds like a good time to abandon ship then.
Only reason is if you think the end results won’t be positive despite interim results. The risk/reward has turned favorable for the first time based on the Rett data, as there is a clear path to revenue which will stop the bleeding from dilution. But that’s still at least a year away so people sitting on a profit may want to buy something else and ride free shares to further diminish risk
Exactly. They’re a tool to help inform decisions. They are no guarantee of anything. I use them to make sure I’m not overpaying or underselling my shares.
Well your charts suggested a quick recovery. What happened? My charts show something much different. And there’s the issue; no two charts are going to be identical based on parameters used
I think 5.40 is a pivotal bounce point, we need to see that hold. If it does, 7s are possible by Feb or sooner. If it doesn’t, i think it’ll settle around the 4.60 level
I tried telling everyone that this wasn’t going to be a quick recovery. Charts are meaningless when it’s tax season + no upcoming catalysts.
I ha a faith your investment group is contributing to the decline along with everyone else selling. Nothing wrong with flipping, at least you’re transparent. But it’s disingenuous to try and differentiate between groups that are putting sell pressure on the stock. A sale is a sale no matter the motive.
I think it’s tax loss selling and profit taking. Avxl doesn’t have any major catalysts in the next 30 days.
Got it. I hope your health improves, I know what it's like to have serious issues at my age and it's not fun. I tend to agree that AVXL is a good long-term hold, albeit a risky one, though each PR the risk diminishes slightly.
Best of luck with your other investments and Happy Holidays to you and your family.
20% over five years is nice and conservative, perhaps too much so. Everyone has their own trading styles. You post a lot of colorful charts. Perhaps going forward it would be helpful to annotate them?
I think a lot of people though are still sitting on losses. Not the ones who actively follow the stick but those who bought the hype years ago and are now even or almost even. Not everyone averaged down in the 2s and 3s and this is the perfect time to cut losses and get a tax break on other winners.
Even if someone bought a month ago and is sitting on a small profit, selling now makes it easier to have a clean tax return. Especially when there are no immediate catalysts and they can buy back In 30 days
It’s all a guess. Charts are simply tools to help make educated guesses.
Good news was a week ago. This is tax selling. And traders flipping shares.
How is an investment group that is in the business of flipping shares any different than what the cabal does? Both seek to maximize profits by selling at the opportune time. And when both sell, the downward pressure causes the price to go lower for those who are still holding.
You also said that shorts are struggling to cover under $7 or something like that.
Does't appear to be the case in hindsight.
No he didn't.
This is true. Dr. Missling pulled the same stunt when he announced the shelf offering on a Friday leading into July 4th weekend. He knows what he is doing. If the data is only mediocre, releasing it during Christmas is the wise thing to do.
I don't know if the data will be bad. My guess is that it will be decent. But whether the data is good or not is irrelevant in the short term if doesn't meet the lofty expectations the market may have. Plus there will be lots of tax selling in the next three weeks.
I've got some stink bids in at $3.25 and $3.80.
I get what you are saying but I don't think you get what I was saying.
Yes this conference was virtual but in years past, Dr. Missling has attended probably a dozen of these investor conferences all over the country, and the vast majority of them were a waste of time and money. They attract gutter-level institutional investors, and corporate CEOs attend them because they are typically held at nice resorts or in fun cities.
This event was different. Evercore is the real deal. The analysts there are the real deal. And a positive presentation will attract the investors every company wants. Three years ago, Evercore wouldn't have wasted its time with Anavex at its inaugural event.
I think you were smart to buy a trading position. But I think you are incorrect that the price action was market makers and shorts exclusively. Institutional investors aren't going to pay full price for their shares when a stock like AVXL is so easy to hammer down with maybe $5-$10mm of capital.
Evercore is a legitimate investment bank. This was Anavex's first plate appearance in the big leagues. We can debate all day whether Missling got a hit or struck out -- but the reality is that something he said resonated with the audience for better or worse. There are two logical explanations for the price movement:
1. The renowned analyst Umer Raffat wasn't impressed with Dr. Missling's answers. Anavex was promptly shorted / people sold their positions, especially since it appears that the first set of data that will come out from the low-dose population is the least likely to show statistical significance.
2. Dr. Missing impressed the audience. Institutional investors wanted in, but not at current market prices. They have the means and ability to (temporarily) drop the price for a more attractive entry point, which is what we are seeing now. Once they've gotten they're fill, assuming the data releases are positive, the stock price can move back to its higher intrinsic value.
Most of these "investor conferences" are glorified excuses to play golf and take the family on vacation. That's why the stock price rarely moves when Dr. Missling attends them. Evercore is the first one that Anavex has been invited to that actually matters.
Which of the two scenarios is playing out remains to be seen, but based on today's price action -- which you also noted correctly -- I have a pretty good idea of what is happening behind the scenes as I imagine you do, too.
Have a great weekend, Tom!
You're joking, right?
Posting a bunch of charts doesn't support your thesis at all. This is a very easy stock to cover, especially under $7.50, as long as you're willing to pay the borrowing fees. Interactive Brokers will tell you exactly how many shares are available to short.