Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
I think it's clear something material is going on. Whether it's a deal or buyout or something else is yet to be seen. But if those 5 execs are truly no longer there, that would imply the company may no longer plan to stay independent as those are core positions. The most negative scenario, which I don't think is the case, is that they finally realize after being forced to do a dilution on worst ever terms, that investors want them to reduce headcount and they are aggressively doing that now. However, I don't see them cutting the head of regulatory affairs now in a clincial hold unless there is some other person or entity assuming that responsibility.
"The only thing he did say was that he wouldn’t have done anything different while he was there."
Bingo, and that's one of the reasons he's no longer with ADXS: he's not humble enough to recognize and learn from his mistakes of having an unfocused business strategy, inefficient and too high cash burn and a greedy self-serving orientation paying himself excessive unearned comp through unethical means on the backs of shareholder interests.
Right nothing out of the ordinary, just the quarterly reporting process, it's very common to see five senior executives disappear from a company at the same time, and even more common that one of them is the head of regulatory affairs and disappears during a clinical hold.
Time will tell what is happening. The mosaic theory is the process of gathering seemingly meaningless bits of information in themselves but piecing them together to determine if a larger story is in play. See definition below. So in itself, it may mean nothing that ADXS has had an interim CEO for nine months and doesn't seem in a hurry to find one even though the stock has collapsed 70%. In itself, it may just be pure coincidence that five execs disappeared from the company's wesbite and the company is not responding to inquiries on it (neither confirming or denying the execs left). In itself, it may be coincidence that the only remaining execs were the three that received retention bonuses during as the company put it "time of transition". In itself, it may mean nothing that the CFO recently wrote an article touting how valuable CFOs to companies in the drug development process, an article which doesn't help ADXS but would potentially help her if she were looking for a new job. But put all these pieces together, and maybe, just maybe...
Regarding your point about the recent dilution, it may have simply been done because the deal had not been finalized in full by the time the company's quarterly reporting ended and if the company had less than a year's worth of cash, from a compliance standpoint an audit would disclose the company is a "going concern" and from a governance standpoint a buyer (Amgen say) would have a hard time justifying paying $XX for a company who had recently become a "going concern."
"Under insider trading laws, analysts may not use material non-public information to help select their trades. But traders might be able to piece together non-material non-public information and material public information into a mosaic, which may increase in value when properly compiled and documented."
Ok, nice thought, but you give no reasons supporting your views. Those who believe something may be transpiring at least provide a basis supporting it.
Typically, in cash acquisitions shares are exchanged for cash at the acquisition price. "If" we are about to hear about an acquisition, I wonder how the warrants will be exchanged. For instance, if the acquisition is at, say, $15, will we have to exercise the warrants (i.e., buy the stock for the $5 strike price then at the acquisition date get cash for our shares), or rather will the warrants themselves be exchanged for cash in the amount of $15-$5 at the date of the acquisition.
First of all, if the PSA results were a failure they would not submitted and been accepted for an ASCO poster. Secondly, my understanding is that because the ASCO poster was accepted, per ASCO guidelines, they cannot release the new data publically until it's unveiled at ASCO.
Thanks, things could get really interesting fast. If an acquisition is about to happen, I look forward to seeing what the price is. I think ADXS, with its broad pipeline and clinical advancements, should be worth $1 billion in a sale, which is around $20, however, that seems like a stretch and too much premium relative to the current price. Given the current price, a $500m/$10 sale seems more likely, unless the stock starts appreciating significantly in the next several days then pops again on the announcement, which could potentially get us closer to $20.
TC, could this mean that the blackout period ends and acquisition happens within the next couple days?
"I shared your information with the company and they have indicated that they will phone you within the next couple of days."
It could be that Amgen wanted ADXS to tighten up the bloated staff before the acquisition for perception so it doesn't appear Amgen buys the company and starts slashing jobs.
Steve, hard to say for sure, but there are a number of signs the company is about to be sold: interim CEO for nine months now (If they intended to stay independent they would have hired a CEO by now or make TL permanent); five of the top execs removed from all material last week and the company is not responding to inquires on it (If they were still there a simple conformation by IR would be in line, but they may be avoiding the issue if the execs were removed as part of a deal); Bonstein recently wrote article touting how important CFOs are in drug development (it came across as something she wrote to help find her next job)
Cattdogg, while I would love to see the company sold for $2 billion/$40pps I don't think that's realistic. IMO if the Board can sell the company now for $10 or higher it would be in theirs and our best interest to take it. Think about it, you're saying the Board would not accept an offer under $2 billion/$40pps, yet they just sold 2% of the company for $2. If they were willing to do that they would most likely sell 100% of the compnay for $10 or more because it's a heck of a lot better than $2.
Hopefully the negotiated sale price is at a minimum $10/$500m. ADXS is worth at least that much, given we have a Phase 3 trial in progress, a $500m NEO deal and HOT and PSA rights still up for grabs. Amgen is natural buyer I think.
No its not obvious. If it happens it will be obvious in hindsight, i.e., we will think "I can't believe I thought all those signs pointing to a buyout or major deal were purely coincidental." I could be wrong, of course.
It's not obvious. It required work and digging a few layers to figure it out. Not many are paying attention to ADXS these days after being burned by poor management and stock performance. Just look at the institutions who sold over the last year. Use this as a buying opportunity before the announcement.
Feels like we could be within days of "the announcement." Hope so.
If the sale was in the works and negotiation began when DO was terminated when the stock was $7 hopefully the premium is off that base price so a potential sale price in the $15-$20 range/$750m-$1b.
Not true, the monthly purchases are pre-planned recurring purchases so they are not subject to a blackout. I know that, because I previously worked for a public company that had an employee stock purchase program, and when we went through an acquisition our compliance dept confirmed that we did not have to stop our monthly purchases. In fact, they encouraged employees NOT to stop their monthly purchases because that change in itself could potentially send the signal to the market that something was going on if numerous employees stopped buying at the same time.
Another sign that, arguably, points to a sale of ADXS is Sara Bonstein's article (see below). Setting aside the debate on whether she has actually exemplified during her ADXS tenure any of the points she advocates, particularly point 1, the article itself does not benefit ADXS or raise awareness of the company or its platform in any way, but rather promotes or attempts to validate her role, which some might argue she wrote to help with her next job now that she has received her retention bonus and the acquisition nears.
____
This year, like never before, we’ve witnessed the deep complexity of our healthcare system, but the drug development process has historically been slow with its own specific challenges. Moving a drug through FDA approval is a lengthy, expensive and highly-regulated process, and for good reason: we wouldn’t want drugs getting into the market that are not sufficiently tested or potentially harmful. While researchers and scientists are an essential component of getting new drugs approved, CFOs play an integral role as well.
According to a report from Pharmaceutical Research and Manufacturers of America (PhRMA), the drug approval process is becoming more and more difficult and protracted. The report finds that on average, it takes 10 years for a new medicine to complete the journey from initial discovery to the marketplace. In fact, it takes an average of six to seven years for a drug to complete just the clinical trial portion of the process.
There are a number of key players (from researchers to patients) and factors (from patient recruitment to partnerships) that move a drug along the development pipeline. The science and technology are critical components – and perhaps the more glamorous aspects of moving a drug through development – but it’s just as important to consider the company’s finances before and during drug creation. That same PhRMA report finds it takes an average of $2.6 billion to research and develop new drugs. So who is handling all of this money?
The chief financial officer plays a critical role in getting drugs from infancy across the finish line, and should be an active player in every part of the process. Here’s what all CFOs at pharmaceutical and biotechnology companies should know:
1. Ensure Minimal Dollars Spent
Like many other industries, cash is king in the biotech industry. One of the major roles for a CFO in an organization is to ensure minimal dollars are spent in the early phase(s) of development, while balancing data creation at each stage. In biotech, this is especially critical when you don’t yet have a product on the market. We must understand the product’s future probability to ensure there are adequate funds for the later stage assets and further development costs – remembering how long and how much money (mentioned above) a drug takes to develop.
2. Be the Voice of Business
The CFO typically acts as the “voice of business” in product meetings to ensure the teams are considering business and financial impacts when making medical or operational decisions. These financial impacts can include near term spend, competition, impact to timeline, impact on market share and size. Often, the medical team is so focused on and excited about the science that it’s easy to forget the financial impact.
Over the past few years, the CFO role has been shifting to more of a strategic advisor role – especially in small companies where we wear many hats. We must make tough decisions around development, which is especially difficult in an industry where the pace of operation is much faster because lives are on the line.
3. Secure Future Funds
The ability to secure future funds (for pre-revenue companies) is mainly driven by creating value for investors through operational execution, and more importantly, data availability. The CFO must ensure the current available funds bridge the company to the next meaningful inflection points. It’s also critical the CFO work with other members of the executive team to clearly communicate to investors and stakeholders when new data is available, and what it means for the rest of the drug development timeline. The biotech industry is so volatile that CFOs can no longer sit back and react; we must be proactive in assessing and mitigating threats, and anticipating changes in the market.
Ultimately, the biggest difference between a CFO in the healthcare industry and a CFO in another industry is the faster pace and urgency that comes with lives being on the line. We’re creating a product that can help someone’s loved one live to see another milestone. Although that responsibility comes with an enormous amount of pressure, our mission to help people serves as daily motivation to keep product moving through development – on time and on budget.
Sara Bonstein, Chief Financial Officer, Advaxis
You must be a really smart guy, as I have heard McKinsey only accepts top of class candidates. Hoping our intuition is right about a potential sale or some kind of change of control in the works at ADXS. In line with the mosaic theory, there are a number of signs in clear sight that in themselves could mean very little but collectively point something material coming to fruition.
"Mosaic theory involves collecting information from different sources, public and private, to calculate the value of security. Applying the mosaic theory is as much art as it is science.[1] An analyst gleans as many pieces of information as possible, determines if they tell a story that makes sense."
Ariad was sold for $5.2 billion. If ADXS were sold for that, it would be around a $100pps based on our shares outstanding. Folks familiar with both Ariad and Advaxis have expressed the view ADXS actually has a broader, more versatile and promsing platform. Ariad of course had an approved drug, which commanded a much higher valuation than us now. Point being, ADXS is at a cross roads, with an interim CEO and our most important trial, NEO, delayed. Meanwhile Amgen is flush with over $30 billion in cash and has expressed interest in doing deals. And ADXS is extremely cheap now. Amgen probably sees it as a good opportunity to acquire ADXS at this turning point - my best guess is somewhere in the range of $500m/$10pps to $1b/$20pps. Maybe coming to agreement on the sales price has been the delay and hopefully Tony Lombardo will shine at this task and get us close to $1b. If a figure has been decided by now, that would explain why the company didn't seem to mind doing an offering on terrible terms, if it was simply a bridge to keep ADXS clean from an audit perspective until the deal is finalized.
I would argue putting in an interim CEO and not hiring a permanent one for nine months now does point to a buyout. If you are negotiating a BO you would not hire a permanent CEO. In the other hand if you planned to remain independent you would look to hire a permanent CEO sooner rather than later or make Lombardo permanent to restore confidence and stability on the company but it hasn't happened.
From a governance and compliance perspective, ADXS needed to do a raise to have a years worth of cash to prevent an audit report of "going concern." The terms of an Amgen deal may not have been final by then, and if ADXS all the sudden became a "going concern" that could be problematic for Amgen to enter a deal with a going concern. Hence the short term need for a raise, albeit on terrible term, to take us to closing of the deal.
Agree, signs point to either a buyout or expanded Amgen stake. In addition to the silence and execs disappearing, it's unusual that it's been more than a year since the NEO IND and it still hasn't started. That's clearly hurt ADXS' credibility and stock price. I think at a certain point Amgen decided it wanted to buy ADXS or at least have more control running the trial. The first step was to get rid of O'Connor and to put an interim CEO with a deal-making background in place and work through the terms of the sale before the NEO trial offically begins, then the first patient is dosed after Amgen has a controlling interest or fully buyout of ADXS.
IMO the delay in hiring a new CEO could be because Amgen may be buying ADXS and the new CEO will be a division head at Amgen.
Not sure your point. There was a $2 raise and the stock is below that now for numerous reasons. There are always "ifs". If you or I had sold we would have more money in our account now. Hopefully, we will be able to recoup some losses because it feels like we could see some transaction soon whether a buyout, partial buyout or deal. I think the delay of hiring a CEO, delay of NEO and five senior execs disappearing from the website with the company not responding to questions regarding why is not just a coincidence but points to a possible change of control in the works.
At the end of the day, we only have ourselves to blame. I truly believed in this company and its platform and still do for the most part. It's been a painful learning experienced and made me realize just how important sound management is to the success of a company and investor ROI. We've seen greed, wasteful spending and lack of a coherent strategy essentially blow through more than $200 million in capital with imvestors loosing 80% of their money even though we are in a Phase 3 and have solid data. I agree though that it's not over yet.
Not funny for those of us who have supported ADXS for several years and seen our investment lose 80% of its value.
Folks that normally get calls back from the company aren't on this question. If they were still there, a simple "yes" would have been communicated.
James never clarified whether it was simply conjecture or if he spoke to anyone at the company who said it. Also, like any of us on a message board, take what he says with a grain of salt. A year ago before the annual meeting, he posted he had a conversation with O'Connor and was convinced O'Connor was going to announce a Europe deal by the time of the meeting.
Then again, we don't know why 5 of the 8 top executives at the company were removed from the website. If they are no longer there, it would point to a potential change of control (buyout or partial buyout) because you can't remain an independent biotech without a head of regulatory affairs, especially during a clinical hold. And the fact the company hasn't responded to inquiries from investors is telling. If those folks were still at the company, a simple "they are still employed with the company." would suffice. However, they may be dodging the issue altogether and not commenting, because if they said, "those 5 executives are no longer at the company" the next logical question is "why?" and if it's because of a change of control happening the company cannot say anything because it's non public material information at this point...hence the decision to not respond or comment on the issue in any way.
Fidelity was the main buyer and they since sold most of their position, around the time of the annual meeting a year ago when O'Connor pushed through another unearned RSU proposal with auto renewals each year not requiring shareholder approval, coupled with him not delivering a Europe deal and having a meeting that was a lot of rambling with no strategic plan or vision.
It's becoming pretty clear the decision at this point that is in the best interests of the company's investors would be to sell the company. The $2 offering, which was literally at an 85% lower price than the last offering at $13.50, supports the view that shareholder would be better off selling the company outright than more dilution on terms worse than even when Tom Moore ran the company. Selling 20% of the company at a record low price for a measly four more months of operations. That's why I think a sale is in the works. The only ones that benefit from continuation of the status quo are the employees, not the company's patients or shareholders.
Agree, those milestone are based on events in the future that may or may not happen, so it's not in Amgen's interest to prepay them, which is why I think an outright sale may be in the works, either that or Amgen taking a larger stake in ADXS in a deal for HOT rights and possibly AXAL.
Did you factor the probability of this in your "conservative" estimate that ADXS is worth, at a very minimum, several billion?
I don't know what to think, I never thought they would do a $2 offering and would be at $1.59. Folks who say in the end the science will prevail are missing the point of how imperative good management and financial stewardship is, which has killed shareholder value.
If the radio silence and lack of response to inquiries is because the company is about to declare bankrupcy and the stock goes to zero, there's going to be some serious lawsuits. I pray that's not what's happening.
Exaclty, why would anyone prefer to see the compnay continue standalone when this management just did $2 offering selling 20% of the company at the lowest ever stock price for only 4 more months of operations.
Yea right the COO/President of Celgene would leave to join the bumbling idiots at ADXS who have destroyed 80% of shareholder and sold 20% of the company at an all time low price for four more months of operating runway.
Well I think at this point investors would be willing to accept a lower buyout price given how much shareholder value has eroded. If folks had told any of us last summer that the company would end up doing a $2 offering, we would have thought that was crazy and would never happen.