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This is probably the first thing you've posted that I agree with unconditionally.
AVXL's problem is that it lacks many institutional investors. This is also potentially its greatest strength, because if/when its drug succeeds, there will be a massive influx of demand from institutions who want to buy retail's shares. This will cause the price to increase exponentially.
I've got my core shares in a shoebox in the closet and I'm not touching them until institutions decide they want to buy them from me. As for my trading shares, I'll happily flip them to other retail speculators in the meantime.
Exactly. At best you get 5 days notice of bad weather coming. And planning a birthday party takes way more than 5 days notice.
Yet another reason that Joey Parsi is a scumbag moron. Weather has no bearing on the number of parties held there.
You'll be fine at $3.38. Just may take a while and a bit of fortitude to hold through the next dip.
Stink bids may fill for those who want cheap shares but I don't expect the sale to last very long.
My guiding philosophies are: plan for the best but prepare for the worst, and believe none of what you hear and half of what you see. It's not much fun living as a skeptic but when it comes to investing it's served me well.
I'd like to believe that MIssling isn't hoping for the best but planning for the worst, but I cannot discount that possibility. He's raising money now while there's still demand for AVXL shares.
As for the A/S being extended, 100M was an arbitrary number. But if Missling plans to go at this alone it will cost way more than $250M to properly bring this drug to market. This shelf offering wasn't a rushed decision either. It's been in the works for a while, so one has to wonder why Missling represented the company's cash position as sufficient for the next two years if his plan all along was to raise more funds?
A simple, "We have enough cash for now but as you all know we will need a lot more going forward" would have been appropriate. But Missling never made this representation at the shareholder meeting. In fact, he insinuated quite the opposite -- that the company's cash reserves would take it through trials and then partnership was the next step to securing funds.
Thanks for the analysis, Tom!
I agree with most of your projections. I didn't end up buying at $3.30 yesterday because I too think it can bleed out a bit more.
My question is what happens if it fills the gap all the way back to $2.80? It would need to hold that otherwise it may get ugly short term.
With 250M dilution coming sooner or later, it seems most investors are gearing up for the possibility that all 100M authorized shares will be issued. I think it's only a matter of when, not if, Dr. Missling informs the shareholders that he needs to increase the A/S limit. If this shelf registration were for $25M I bet the stock price would still be around $3.80 today.
Park West has 2.2B portfolio. It's 3.4M shares of AVXL is worth around $12M.
12M / 2.2B = .005
Missling is a garbage CEO. Thankfully the drug will or wont work independent of his many blunders. AVXL should be trading so much higher right now even if its assets aren't proven but Missling is kind of an idiot so you get what you pay for.
There's a reason why none of the BP companies have tried to poach him from tiny AVXL.
Sure, but if they were really confident why not try and acquire 30% of the company? $12M is not a lot of money to play with, and if it happens to get them 5%+ so be it. Have you looked at their other biotech holdings? What percentage do they own of AVXL's competition?
Maybe he will, or maybe he'll botch everything entirely and AVXL will become just another one that had potential, and failed. You're entitled to your opinions about the FDA but Missling needs the FDA way more than it needs him. In time he will be pleading his case in front of them hoping for approval.
Nobody knows, and all posts are here nothing more than a combination of optimistic and pessimistic speculation.
TOM123 -- what do you make of the current chart? It hit my near-term $3.35 support call and seems to be in a holding pattern around this area. Ideally it will drop more but I think a starter buy at this level isn't the worst trade in the world either...
AVXL represents .005% of Park West's portfolio. I don't think that the fund manager who picked AVXL as an addition would even notice if AVXL were to declare bankruptcy tomorrow.
Correct. Missing showed a lack of judgement on this one by including this guy on the SAB. Not only is his track record abysmal, but he's a person of questionable moral character.
It's immaterial to the stock price, and the long term prospects of AVXL but a bad look nonetheless.
Sometimes I wonder what these SAB people do anyway. Seems like Missling and Macfarlane have this under control and the SAB is more to appease current investors and recruit new ones by giving the company some legitimacy.
I'm not looking at this from a long perspective. I have some shares I'll hold until 2020 trial readouts, but my "devil's advocacy" is 1) a response to the unabashed enthusiasm for AVXL that I believe may have merit one day but for the time being is premature, and 2) a response to price outliers that are due for a correction in either direction.
In this case what caused the run to $4.15? Russell? Short covering? It was not based on anything material or there would have been an 8-K released. Who is selling or shorting this based on a shelf offering that lacks details? Seems equally risky to me.
I like slow and grow. One or two cents per day is fine with me. When a stock goes from $2.75 to $4 in less than a month on no news, logic informs that a retrace is almost always in store.
I said in a previous post last week that $3.35 is the threshold that needs to hold. What do you know, stock price is right at that level. I have my order bids in place to rebuy my trading shares, and honestly $3.35 isn't a bad place to add for both short and long-term sentiments but its going to take material news to get AVXL back above the $5 hump for the first time in two years.
Blinded means that the participants don't have the data or know if they they're taking the placebo. Until its not blinded. Otherwise, it wouldn't be a blinded trial.
AVXL may have the data though. Who knows.
Either way the $250M offering is suspicious timing for better or worse.
“Aisen’s work, though, has been a leader in high-priced failures. No drug has yet to survive the trial process for bending the disease’s progression, and after Biogen’s massive fail on aducanumab, some investigators are going back to the drawing board in a reassessment of the basic theories that Aisen helped birth.”
Yup, just the guy I want advising Anavex.
Missling should cut ties with this guy ASAP
Jail? Lol. Missling isn’t doing anything illegal. He can’t control how the data performs in P3. Lots of drugs show promise early and flop in P3.
I hope avxl does well, we will all male money if it does. But it’s important to understand and appreciate the risks too. The $250M can be seen as good or bad news. Generally offerings are viewed as a negative and considering AVXL dropped 12% and counting the market seems to concur.
Nobody’s going to jail though. And it’s certainly possible Missling wants to hedge his aggressive bets and raise money now while he’s still in a good position to do so. If AVXL is a $20B company why not raise more money after the P3 ALZ data comes out? He could raise $1B easily for minimal dilution then and it’s not like he needs the money for the next two years anyway...
Or maybe the data is garbage and he won’t be able to raise $250M a year from now.
Nobody knows and it’s all speculation. I can think of a dozen positive reasons why the offering was filed last week and s couple of really negative possibilities too. Only time will tell.
Traders are often gamblers, yes, and most end up losing.
But there's no such thing as "investing" in a stock like AVXL either. You can do all the due diligence in the world and still be wrong about whether AVXL has anything of value to sell. AVXL is just as much of a gamble as trading is -- one could argue that it's a larger gamble because of opportunity cost.
Buy and hold investing works well for established companies with projectable revenues that any 1st year MBA can model five or ten years out. The risks with those companies are fraud, or some major macroeconomic shock.
Buy and hold may work well for AVXL, or it could end up being a complete bust.
The gamble is the same with AVXL, for now. Once it proves itself, and the risk diminishes, AVXL becomes an "investment." But it's not there yet.
You left out the biggest difference though: AMRN had valuable, proven assets that were worth billions of dollars. AVXL has unproven assets that may be worth that much, or may not be. Nobody knows yet.
When AMRN was mentioned a few weeks ago, everybody was saying how there is no comparison. Now there is a comparison? I'm confused...
Or is it that there's no comparison when discussing how AMRN was the much better investment opportunity over the last five years compared to AVXL?
For the time being, trading remains the best way (and only sure thing) to make money in AVXL. For those who believe in AVXL's potential, trade the tides to increase size and lower cost average. For those who aren't sure about AVXL's potential, trade to diminish risk with free shares.
There will be a few who sell early. But far more will hold this to the bottom of the cliff if it ends up failing the trials. That's the wonderful thing about marrying a stock. They're hard to let go of, too.
There is no reason to believe that this won't be approved. But there's no reason yet to act like its a sure thing, too early to tell either way.
Speculation = gambling.
Until then, the only sure thing is that money can be made trading both the ebbs and the flows.
It ended up down 9%. Question becomes whether the real selling takes place on Monday when everyone is back in full swing or if the worst is over?
3.35 held, for now.
Opportunity costs are real. They are next best alternative to a given decision.
In this case, AVXL has been a terrible decision unless someone has been averaging down.
But you can't look at opportunity cost in a vacuum either. If someone spurred AVXL for the next best alternative and AVXL announced that it was selling itself for $20B, clearly the wait would have been worth it.
Here's the question: Why only do a shelf offering for $250M? Seems like a very small amount of money to raise for a drug that is worth in the billions if successful. Why not try to raise $500M or even $1B if you're confident that the stock will go to $50/share after the data comes out?
I don't know what to make of it but I wouldn't rule out the possibility that Missling is trying to protect the company in the event that the drug doesn't meet everyone's high expectations.
And guess what...selling doesn't mean you're "short" or you "hate Anavex" or anything like that. It just means that you're doing a better job of trading what the stock gives you.
It's possible to like AVXL's long term future but recognize in the short term its stock is overpriced.
Congrats on the profitable trade.
Not necessarily doomed, but down 10% today.
But this offering is a good thing because a few shares traded pre-market at $3.99, right?
Stock is at $3.47. Down 9%. And it would be down a lot more if today were a normal trading day and not following a holiday.
Missing knew that he was dropping bad news, that is why he waited until AH the day before the market closed.
Good opportunity to make money on both sides of the trade. Right now the smart money is trading down.
Define cheap?
According to a highly cited study in JAMA, the cost to bring a single cancer drug to market is around $600M.
What makes neurological drugs for complex indications like Alzheimer's cheaper?
https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2653012
https://www.forbes.com/sites/matthewherper/2017/10/16/the-cost-of-developing-drugs-is-insane-a-paper-that-argued-otherwise-was-insanely-bad/#3e6de3492d45
Some estimates put the cost of develpment in the billions. With an "S".
https://www.policymed.com/2014/12/a-tough-road-cost-to-develop-one-new-drug-is-26-billion-approval-rate-for-drugs-entering-clinical-de.html
I think the true cost is somewhere in the middle. But even if the cost were, say, $300M -- that still puts AVXL in a precarious situation absent additional financing, which I think it will secure, but not without using those preferred shares for reasons other than "hostile takeover" defense.
The retrace is healthy. It would have been better had it happened on its own accord and not because of pending dilution, but either way from a purely TA perspective the charts had to cool down a bit.
I'm fine with losing 100% of my investment in AVXl. Obviously I would prefer not to but I assume the risk of investing in any company, especially start-up biotech trying to cure the one of the most elusive diseases.
What Missling is doing is going all-in with pocket Qs. It's a solid hand, but not waiting for the flop. Its risky, and not a move that I particularly agree with for the obvious reason that it's still an easily defeated hand.
The other issue is that going at it alone is going to cost a LOT more than $250M. So this offering won't be sufficient to properly bring the drug to market without a partner.
So the way I see it, the $250M is the tip of the iceberg. And the 100M A/S is going to be increased.
If he's going to have to dilute massively anyway, may as well partner and get the added benefit of expertise, manufacturing labs, and a boost in reputation to ward off future short attacks.
Being long is not a prerequisite to supporting the CEO unconditionally.
I'm a Republican but I don't support this current administration's policies. It's the same principle with Missling.
Seems like the market is responding favorably to this AMAZING offering news, right?
Good buying opportunities await those who are patient.
Semantics, you know I conflated 273 AND A371. Too much booze last night and still nursing a terrible post-holiday hangover.
Point remains though, Missling knows whatever he wants he will get with zero resistance. So what makes you think that he won't try to increase the A/S above 100M if that's what it takes to get the full $250M he wants? Because at current share price 250M raised puts him well over the 100M limit.
Depends on what price the $250M is issued at.
I still think AVXL is going to eventually blow past the 100M A/S shares.
Dr. Missling isn't stupid, he knows he has a ton of lemming shareholders who will vote for whatever he asks for. He won't even have to use the preferred shares to circumvent the authorized limit but the charter may allow him to if he needs it.
If A271 works then it doesn't matter if there are 200M shares. If the drug is worth 10B, that's $20/share (a 500% gain from today).
You're assuming that he doesn't also have plans to increase the authorized share limit. This can be accomplished in any number of ways, from a reverse split to using the preferred shares that were recently approved.
"Amazon’s corporate charter, for example, states that the company’s total authorized stock shall include 5 billion shares of common stock and 500 million shares of preferred stock. The charter permits Amazon to increase its authorized stock if there isn’t enough unissued common stock to allow for the conversion of preferred stock. Corporate charters often require shareholder approval to increase the number of shares of authorized stock."
I haven't read AVXL's corporate charter but it wouldn't surprise me to see a similar provision. Maybe this weekend I'll take a look at it.
Here's a question: if AVXL is so valuable, why would Missling max out the A/S at a measly $5.10/share? And if partnership is an option down the line, why the need for $250M cash?
Hopefully this is just a preparation move, and he is going to hold off on issuing any cheap shares, but the writing was on the wall when he said that $17M was enough to get through the next two years and astute investors found that to be an incredulous statement.
Reached post limit, going to go enjoy the rest of the beautiful California afternoon. Have a great 4th of July everyone!
Depends on how many shares are sold and what price they're sold at. Typically warrants are also issued so it's impossible to answer your question based on the info we have. This is just a shelf offering to register the remaining authorized but unissued shares for sale.
If Missling sells each share for $25, that would be 10M shares added to existing outstanding amount. If he sells the shares for $5, it would be 50M which isn't possible unless he pulls some shady moves to increase the A/S which I think is possible as well.
Plan for the full 100M A/S limit to be hit soon though.
Missing definitely misrepresented that the company had sufficient funds. But I think most everyone knew that $17M wasn't going to be nearly enough.
So here's what I think:
1. Positive news is on the horizon. Missing wants to have money to prepare for marketing and manufacturing if he ends up not partnering.
2. Negative news is on the horizon, and Missling knows that he's not going to raise a dime if A273 fails so he tries to get as much as possible now to keep AVXL afloat if A273 is a dud.
It all depends on perspective. For those who believed that Anavex had sufficient runway with $17M in the bank, it's not good. But the writing was on the wall that more shares would be needed and before all is said and done, AVXL would end up pushing the limit of the 100M authorized share count.
I suspect we will see some tricky maneuvering to circumvent the A/S. Possibly another reverse split or voting to increase the limit.
At $5/share, that's 50M Missling proposes to sell. that puts AVXL well above the 100M limit.
Or maybe they vote to raise the O/S. Happens a lot. Or maybe they do another reverse split to lower the number of shares. Or maybe they use those preferred shares everyone wanted so badly to circumvent the OS. Lots of scenarios, but the fact is it appears some dilution is coming. How much and what price remains to be seen.
Explains the After-Hours drop and the .40 decline from yesterday's high.
Let's see if this settles back in the $3.30 area and finds some support there or above. That would be a bullish sign for the next leg upward.
What about A371 trials? What about all the other pipeline trials?
He will be needed then for the same reason he was needed for A271 pre-trial.
But how does Hampel help Eisai in any way? Put another way, why does Eisai need to hire Hampel to make a move for the A273 franchise?
Seriously looking for an answer, and playing devil's advocate because nobody else will.
Isn't it just as possible that Eisai is playing the long game and is bringing Hampel on board to try and develop the successor to Aricept?