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There's an article on VFN's Stock House that's positive, but misstates the fact that they were turned down on Fast Track. They indicated they were turned down for rolling review, Fast Track was still possible when they file the NDA.
I'd say the odds of getting fast track may be slightly better than even as the FDA is trying to do it as frequently as possible.
Gary
Where does AEZS go from here?
Hopefully the filing of the NDA for AEZS-130 isn't the next event we see, as early 2013 is the best estimate we've gotten for that. What could we see prior? For one, AEZS-108 could begin it's Pivotal Trial.
We know we'll be learning more about AEZS-120, while it's very early, the results should certainly be positive news even if we're many years from a pivotal trial.
The interim look at the MM Trial with Perifosine probably won't come before the first half of next year. A decision to continue the trial may not sound like a big deal, but it's really all that can be anticipated as even spectacular results can't meet the criteria for approval at the first peek, and the monitoring board can't actually say what's happening, just a recommendation that results warrant continuation, or not.
This may not sound like much, but how many other companies trading for under $1 have one drug ready for an NDA filing, another drug advancing in a Phase III Trial and a third drug entering a Phase III Trial. I should add they do have an approved drug as well.
Gary
What did we lose today, as I see it, about 4 months.
Had the FDA approved a rolling review, the FDA would have needed at least a couple months after the final submission which the company said would be early next year. That said, and the fact that the company can still get Priority Review leaves us with roughly a 4 months loss of time in the approval process.
Did the company get punished for failure to get the rolling review, yes. Would they been better off not to have tried it, I don't think so. When they announced they'd filed, they were still trading in the $.40 to $.50 range, their filing got the attention of the likes of $heff, who true to his trading method, got out before the FDA decision with a healthy profit.
Today we were punished, but hopefully investors will realize that little has really changed with today's decision. In reality, the decision actually makes the companies execution of their business plan slightly easier. Why? Because now approval of AEZS-130 won't come prior to when data from the Cancer Cachexia trial is due. A partnership made prior to this data might not properly value the drug, AEZS might benefit if no effect was seen in Cancer Cachexia, however if efficacy is seen, AEZS could have asked and gotten far more. Now by the time approval is obtained, we'll know if Cancer Cachexia should be considered, or not. If it is, a partnership could bring ten to perhaps even a hundred times more than what would be offered up front for what otherwise is simply a niche drug.
Certainly no one likes delays, and taking well over a year to submit an NDA seems extreme, but then who here has prepared an NDA. Big Pharma's generally take a quarter or more after a trial concludes to prepare the NDA, compared to a tiny Biotech like AEZS, their resources are almost infinitely greater. This trial was complicated by the withdrawal from the market of the only previously approved method for diagnosing the condition. If they were still competing with that product the filing would no doubt been far more straight forward. With limited funds and the complexity of this filing, while investors expect more, taking over a year to prepare the NDA is not that unreasonable.
Gary
Today apparently should have been the day when the company should be able to say what the FDA had done with their Fast Track application. They haven't told us about that, rather telling us about European patent coverage for the drug.
There are many reasons the FDA may be taking extra time, including perhaps requesting more info from the company. It's purely speculation on my part, but I don't believe any company normally advises investors of minor delays. If on the other hand the Fast Track authority was denied, in time investors should be told.
Let's hope we see some positive news shortly, today's news is positive, but not a big surprise. Fast Track wouldn't be a surprise either, but probably somewhat tougher to achieve. The surprise we'd all like to hear about could involve a partnership, or could come as positive trial data from one or more of the trials currently in progress.
Gary
It would appear that the company hasn't yet been told of the FDA decision, or may not wish to announce it during the trading day. I believe we'll get an announcement either after the close tonight, or before the open tomorrow unless there has been a delay, which can occur with the FDA.
I do not believe this filing is like certain others with the FDA where if they make no comment over a certain time, that's deemed to be approval. If anyone thinks I'm wrong about this, please let me know. I believe AEZS will get an answer, yes, no, or perhaps a question or request for additional information.
Gary
Agreed, and there were others as well. I believe the truth is that many people follow Pivotal Dates and know they can get nice gains before they occur. While Priority Review is really not that big in the long run, it's certainly has to be considered Pivotal.
For people who invested under $.50, they got a great return on departing before that Pivotal Event. If the decision is positive, they could have left substantial money on the table, but none can deny they made a healthy profit. If they move on to another stock that has another pivotal event in the next few months, they might build on that profit substantially, perhaps more even than if the news is positive, though frankly they'd need a lot of luck to get a double or more as AEZS has done for the likes of $heff.
For people like me, having bought substantially more shares after the fall, I'm now near even. Some like me would bail out on being even, which probably constitutes why certain prices form resistance levels. I on the other hand believe the greatest opportunity remains because the fundamentals since I bought the stock for as much as $3+ really haven't changed.
Certainly, we had a trial failure. If you look at all the cancers Perifosine might be targeted at, I really don't believe the failure lowers it's potential by 10%. Mind you, I'm not writing off all of Colon Cancer, only Stage 4, the Phase II Trial still demonstrated it's worthiness in Stage 3, and that could easily trickle down to Stage 2 and 1 if proven. The failure, IMHO, came from not having sufficient Stage 4 data in the Phase II to recognize it frankly wasn't working in patients that were so refractory to other meds. Clearly it's cheaper to run a trial with Stage 4 patients if the FDA specifies that they want data from a specific number of patients, why, because they simply don't live as long. Had they done a Phase II Trial with Stage 4 patients and another with Stage 3, we'd probably never have initiated a Phase III in Stage 4, and perhaps by now we'd be nearing the conclusion of the Phase III in Stage 3, and I believe the data would have been great.
It's money that dictates how far companies go, the less money they have, the more risk they may be willing to take. If AEZS originally partnered Perifosine with one of the Big Pharmas rather than KERX, I doubt if the trials would have been run as they were. In addition to a greater number of Phase II Trials to define the drugs capabilities more clearly, once they selected one or more Phase III Trials to run, they'd have put more money into those trial. Companies like Roche, SNY, Novartis, etc have no qualms about having hundreds of clinical sites to recruit just a few patients each to reach the goal for enrollment in months. Tiny companies like AEZS and KERX generally can't support hundreds of trial sites reaching very high burn rates, they keep the burn rate far lower by limiting the size of the trial, and taking years, rather than months to be fully enrolled.
Gary
It should be noted that $heff, and many of his followers sold out today with healthy profits. I frankly believe he might have held had he not doubled his money today, but with his trading strategy, taking a double with an FDA decision due Monday should be expected.
I only hope that $heff buys in again, on future upcoming FDA decisions, at substantially higher prices than we're at today. I believe that the sales of those who publicly and privately follow $heff probably thwarted the gain which otherwise would have been made today, however, his buy recommendation did probably have something to do with it's rise from $.46, when he made the recommendation.
Personally I believe the odds favor us to get positive news on the Priority Review, we should know soon enough. If I'm correct, Monday may be the first day of ten we need consecutively where the price closes above $1.
Gary
Mike,
In the case of AEZS-130, the trial in question is complete, and has been for nearly a year. The company, no doubt because or some funding limitations, has spent time working with the FDA in an attempt to be certain that they're properly answering any questions the FDA may have, and in trying to convince them it's worthy of Fast Track designation now.
If they get it, it's my belief that some time in the 4th quarter they'll be able to submit the first required part of the NDA, starting the 6 months clock. It's just speculation by me, but I can't believe the FDA would review anything in less than 2 months, so I believe to get the 6 month review without delay, the last part of the NDA would have to be submitted by 4 months after the first was submitted. If I'm correct about this, and if all goals are achieved by both FDA and AEZS, approval could come in the 2nd Quarter of 2013.
If they fail to get Fast Track, the NDA should still be completed in the 1st Quarter of 2013 setting up a 1st Quarter 2014 date for approval, i.e. they'll lose roughly 10 months.
I certainly know nothing about rolling NDA submissions, it was purely a guess on my part that the FDA would need two months to review the last part of the submission. If anyone knows the specifics of how this is done, please let us know. It's never a guarantee that the FDA will not delay, even if all terms that AEZS must meet are met, 3 month delays on Fast Tracked drugs are common, on occasion the FDA will do that a couple times. While I have no doubt the FDA is attempting to be more responsive, while AEZS-130 for diagnosing HGH deficiency is a tool Doctor's will no doubt use, it's not nearly as in demand as a drug that benefits terminal patients, etc.
Gary
I'd put the odds of them achieving it at 70% or more.
The odds would probably be higher if the drug was aimed at a terminal disease, but I believe they'd be much lower if the company hadn't spent much time in discussions with the FDA. I don't doubt that if the decision came only from the people they were speaking with, the odds would be closer to 100%, but unfortunately the FDA bosses frequently don't listen to what their staffers say and overturn their advice. Hopefully that won't be the case here.
We all need to realize that Fast Track is not the key to approval. Many Fast Tracked drugs haven't been approved while drug that either didn't attempt to get it, or were denied it, have been approved. In that the company's not ready to submit a complete NDA, but may be close to submitting the first required part, the approval of Fast Track could save perhaps 10 months in the approval process.
Here's my logic. If Fast Track gives a 6 month approval cycle from the time the first part of the NDA is submitted, I would suspect that the last part of the NDA would be required at least 2 months prior to the FDA decision, i.e. they have 4 months to finish the NDA. Without Fast Track, the complete NDA should be submitted by 4 months after the initial submission would have been made, and that would initiate a 12 month review. The net result would be 10 months more to gain approval if the FDA took the entire year to decide. Fast Track is far more preferable, but it's not the end of the world if it's not granted.
Gary
If the trend continues through the week and we see $.80 or more by Friday, I believe it's a strong possibility that a positive decision from the FDA on Priority Review and permitting a rolling NDA could move the price back above $1 on the news. I'm not saying it will happen, but I believe it could.
As for the probability the FDA does agree with the Priority Review, I'd put it at 70% or higher. Why not dramatically higher, because while this is a diagnostic that has no current competition, it's for a condition that's not considered critical. It's my understanding that Doctors who suspect a person of being HGH deficient will give a supplement and see if the conditions that suggest it improve. If they appear to improve, the diagnosis might be considered proven, even though their is no proof.
Hopefully the company spent sufficient time with the FDA to reach a position supporting Priority Review that the FDA has accepted, at least in theory already. Clearly if the company's turned down, it would be a negative, not really a huge one, but it would be big until something positive offset it.
Gary
I'd put the odds of it happening roughly even unless the price rises above $1 prior to then. While I believe they'd have little problem getting a 6 month extension, I'm not certain the Board wouldn't like to see the O/S diminished.
I don't know if this has to do with being a Canadian Company, or just is simply a fact in the way they're incorporated, but currently there is no limit on the number of shares the company may issue. Clearly, I don't like this, but it's a fact. That said, while I cannot support massive dilution, the funds acquired by their ATM's have put the company in a much stronger fiscal position than if they had not done them.
Success in drug trials, partnerships and approvals are the key to success for stockholders, they'll do so with or without a reverse split.
Gary
I hope they request and get the 6 months extension, but I'd say the odds are about even they'll do the split by then. Remember, to stay on the Nasdaq they must trade for over $1 for 10 consecutive days, so they must allow for those ten days.
In addition, they won't do a split that puts the share price below about $1.50, perhaps more. Clearly if they must do it, a 1 for 2 would be the most acceptable to individual investors, but I don't see that happening unless the share price is $.75 and preferably more.
I'm no expert on when they can ask for the extension, or how quickly the Nasdaq must act. If the timing came down to the point where they couldn't have the 10 consecutive days above $1, they'd be forced to do the defensive thing and do the R/S.
To me it's sad that the dollar price, and not the Market Cap, determine whether a company stays, or goes. Companies with a fraction of the market cap of AEZS are fine because of fewer shares outstanding.
Gary
Kerx terminated the partnership to end its responsibility to fund the Perifosine trials. They do get a small royalty for North America if Perifosine is approved. AEZS maintains partnerships elsewhere for Perifosine, however the major markets, North America and Europe, as well as many other places, are wide open to a partnership.
As for the reverse split, they have until the end of 2013 to do it if they choose. The company has played it very close to the vest wrt their intentions. Most shareholders hope that they'll ask for the 6 months extension for Nasdaq compliance, taking the need for the R/S to early May of next year if the $1 share price requirement hasn't been met. Personally I'm unsure management will wait that long, I hope I'm wrong.
If AEZS gains one major partnership for any of their drugs, the $1 share price should easily be met. Solid trial news and the NDA acceptance are other possible catalysts to such a move. Should several positive things occur, their is no reason this stock can't again be setting new 52 week highs.
Gary
I've been out most the day today and yesterday, other than investors suddenly discoving this gem, I don't know where this action has come from. Did anyone listen to yesterdays presentation. Once again, I can't right now, but saw no one post about it.
Gary
Pete,
I can't deny that a different cast of characters might be able to take the ball and run from here, and perhaps they'd even run faster. I however believe that the success or failures experience by new management would be completely attributed to the efforts of those they replaced. That might not be true for new initiative they put together, but it would be year's, perhaps a decade or more before a truly new development reached the point it was approved.
Now lets look at what might be lost. I honestly cannot say how much the management had to do with actually creating the numerous drugs created by the company, or if it's purely the team they put together. Even if they contributed nothing scientifically, the question might be, if they left the company, would they be followed by any of the people that created this pipeline.
Before I'd want to see them ousted, I'd like to know much more about what would be lost, as well as what might be gained.
I've seen other companies with far more elegant spokesmen who probably could sell ice to eskimo's. Frequently these people released all sorts of statements promoting their companies. Truth is, they could do it without concern for what the SEC and even the FDA might say because their stocks were listed on the Pink Sheet's and virtually no regulations are imposed there. I'm not saying all Pink Sheet stocks are scams, but some certainly are and generally they survive on promising PR's, and issuing more stock, and finally by massive reverse splits, ofter 100 for 1.
Our management may not be that dynamic, but they've managed to develop a pipeline that's tremendous for a company of this size. The key of course is that at least some of the pipeline reach approval. They do have one product approved that routinely adds some revenue from its owner, this demonstrates they have the technology to do it. Another product, AEZS-130 looks very likely to be approved next year. The really big products, Perifosine and AEZS-108 are probably one to a few years from an approval decision. If either Perifosine or AEZS-108 are approved, after sales matriculate it shouldn't take more than ten thousand shares of AEZS to make you a millionair in AEZS alone. As I see it, either of these products could sell in the billions, and should AEZS-130 prove effective with Cancer Cachexia, it might do so as well.
To me, one billion in sales should represent perhaps $200M in earnings annually, nearly $2 a share. To achieve a $100 share price the annual sales probably need to be in the billions, but if these drugs work on just a fraction of all the diseases they appear to work on in Phase II Trials, billions certainly are possible, even probable, and that doesn't consider what may be paid to partner these products.
Gary
Pete,
I'm not big at believing you should throw out the baby with the bathwater. I actually believe the management of this tiny biotech deserve credit for bringing so many potentially great drugs as far as they have. That's not to say nobody could have done it better, but I still believe they could get the job done.
Another company I've been involved in for decades, IMGN, is soon to have its first major success. The CEO who'd brought it most of the way has retired, but in reality, with a dozen drugs in the clinical pipeline and dozens more in preclinical development, it could be decades before drugs who's genesis began with him are no longer in development.
My point is that if you replaced the entire management team today, if there was success in the next several years it would be because of what the old team put in place, likewise failure could also be blamed on them. Had the colon cancer trial gone differently, they'd be the toast of the town. If the MM, or the Cancer Cachexia, or other trials further in the future go well, they could be the toast of the town in the future. Such is the life of executive in biotech.
Gary
Just dreaming in the daytime.
Do you ever like to daydream, I do. Today I was thinking, call it daydreaming, about what AEZS could be worth if some things went right. Not everything, just some things.
Frankly, the company right now has 3 products in late stage development with the potential of being blockbusters, potentially many times over. I'm speaking of AEZS-108, AEZS-130 if Cancer Cachexia results are positive, and Perifosine.
I believe we all could stand to daydream about what each of these products could potentially be worth. Both AEZS-108 and 130 are yet to be partnered. With the dropout of KERX, Perifosine may still be partnered in perhaps 75% or more of the worlds most lucrative markets. I believe the dreams should be based on what such partnerships should be worth.
IMHO, if Phase II trials demonstrate a drug can potentially treat many cancers, and Phase III Trials are ongoing, or being initiated for one or more of those indications, depending on the strength of the data, the initiation of worldwide or ROW partnerships on these drugs ought to bring up front payments ranging from somewhere in the very high 8 figures to low 10 figure numbers. $100 million would certainly not be excessive for such a drug, and without the reverse split this still represents nearly $1 a share.
Now let's look at earnings. At this late stage double digit royalties certainly are justified, and the scale should escalate with sales from perhaps mid teens to lower 20 percentile as blockbuster numbers are achieved. That is to say that if after a year or two of sales after approval the gross sales reach $.5 billion, AEZS should receive roughly $75 million, and a few years later when $1 billion was achieved, they'd see $200 million. These are numbers that dreams can be based on.
If we also recognize that such partnerships also have milestone payments, so substantial money is paid with approval, as well as each time a new sales goal is achieved, I believe it's reasonable to assert that these funds will offset corporate expenses, so sales income will be pure earnings. So what's a fair price for a company that's earning over $.50 to roughly $2 a share. Certainly P/E's from 10 to 30 are very justifiable. It's my belief that 30 or more is easily justified if substantial revenue growth is anticipated, which should be the case even after the $1 billion sales level is reached.
To put it another way, with $1 billion + in sales from a single drug, a $60 share price could be expected, or over a 100 banger from where we are today.
Dream on, what are we talking about if 2 or all 3 drugs go blockbuster. What if instead of $1 billion they do $5 billion. That's what really makes daydreaming fun. I'm not saying it will happen, but I don't believe there is anyone here who honestly believes it cannot happen. It could be 5 years or more before we know if we're headed that way, but barring a buyout, which also could be rather lucrative, we really don't know whether 1, 2, 3, or even more drugs will be approved in the next ten years, we certainly have many drugs in development that could be.
Gary
Whether you like $heff or not, he does keep up with companies he's following, the following link gives an indication of his thinking:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79344000
Frankly in the case of PFUDA dates, $heff often sells prior to the dates with substantial gains, in many cases even after approval the stock price has fallen below his sell. While I doubt he'll sell before the approval or denial of expedited review permitting a rolling NDA filing, he may if the price is up substantially before that time. While I certainly don't trade with him, I do respect some of his work.
Gary
Thanks, you linked to some good info. The question is what can be done to turn this around.
Deregulation always sounds like the right thing to do, but in fact we need regulations. If you look at the products of deregulation you need to ask if you were better off decades ago when airlines, energy, banks, etc were much more regulated, I believe the answer in virtually every case is yes, the lack of regulations led to higher prices and less service, not the lower prices and better services that were promised. The economic failure in 2008 was largely a case of greed, massive bonuses, etc leading to a house of cards that had to fall. Key executives got 7, 8, 9, and even 10 figure bonuses for building what they had to know was a house of cards, but it didn't matter what they were building as long as they were growing their bonuses, when the house of cards fell they walked away with billions.
Remember decades ago when airlines were regulated. Back then you could fly non stop to all sorts of cities. Your baggage was checked at no cost to you, and even in couch you got a hot meal if the flight was over a couple hours. The planes back then often flew half filled, prices were lower, but the likes of Pan Am, TWA, etc had provided quality service for decades, and continued to do so. How does that compare with flying today? I used to look forward to it, now I try to do so as infrequently as possible. Jet's fly a lot faster than the DC-6's or Constellation's, yet I suspect that for many destinations it takes much longer to get their because of flying through one or two hubs where way back then non stops were available at no extra cost.
I may just be nostalgia, but I believe we'd be better off if we got back to basics and stopped letting the computers make their decisions in nanosecond which make profits for few while costing many.
Gary
In theory you're completely right, in practice however results are very different. I would hazard to guess that over 90% of all companies that do reverse splits continue on a downward spiral, many to oblivion, or at least additional reverse splits because they're viewed as a big negative. Of course if really positive news comes later, the price corrects.
Splits on the other hand are viewed extremely positively. In prior decades, splits often occurred as companies approached triple digits, but today permitting share prices to grow into the hundreds of dollars has become a status symbol for companies like Apple, Google, etc.
In theory, companies kept prices where investors could easily trade in 100 or 1000 share increments. Frankly I'm amazed at how many 100 share trades are made in AEZS, even with the cheapest commission rates on a percentage basis you have to be up substantially if you buy then sell 100 shares just to break even. I would suspect that many trades are computer driven, and those trading that way don't pay the commissions you and I do. Frankly, I wish this sort of market manipulation was stopped, but it's currently legal.
Remember, it hasn't been that long since 1/16th of a dollar was the smallest spread between bid and ask for most stocks. Often the spread was as great as $.25. Today we often see spreads of $.0001 between bid and asked and still no shares are being traded. My brokers won't let me put in a bid at 4 or even 3 digits, yet computers trade on my offer and generally get the stock at a price that's tenths or hundredths below my offer, or sell it for the same increment above. What difference does it make to me, it's insignificant.
Someone just bought and/or sold 100 shares of AEZS at .4948, that's $49.48. If this were an individual buyer, would they really not buy the stock for $50. After commissions they probably paid over $55 and if they sell and pay commissions they'll need to get over $60 for those same 100 shares to be even. My point is that investors don't need $.0001 trading or even $.001 for stocks trading above about a dime. While $1/16 was probably a larger increment than what was best for markets, a penny is really as small as most stocks should trade for until their price is below some established value. It's time for people to take control back from the computers.
Gary
That's what I thought and I hope you're right about them using discretion by not just getting it done. Unfortunately, I've seen other BOD's go the other way and often at extremes. I.E. while say 3 for 1 would have brought a near $2 price, they opted for 10 for 1 to go for over $5, justification, more Institutions will buy when over $5.
While it's true many Institutions can't buy and hold stocks selling for under $5, using Reverse Splits to get there hasn't proven to interest them, they want companies that raise their price to those levels, not R/S to get there. In most cases it took little time before they were trading closer to $1 than $5.
Please don't get me wrong, I still hope the BOD will act in our best interests and wait for the many positive things which could take the price above $1, but I'm not convinced they will. What's bothered me the most is the company's failure to discuss the R/S and their intentions before the vote. I believe they indicated they intended such a discussion at the quarterly, but then they held of the quarterly to the same day as the Special Meeting and barely mentioned it, as all votes had to be cast previously if you weren't actually attending the meeting.
I think they knew they controlled sufficient votes to pass it, but I still believe investors deserved that discussion, and their failure to do it disturbs me.
Gary
I'll be very honest, I didn't scour the notice for the Special Meeting on the reverse split in the manner an attorney might. I've seen many posts indicating that AEZS won't do the Reverse Split until the last possible second. I'd like to know if anyone saw that specified in the documentation they provided.
Personally, I thought their effort came much earlier than needed, but if they're truly prohibited from acting until they're facing delisting near term, than I feel better. If on the other hand their are no restrictions on the Board of Director's who'll be executing the R/S, I'm not certain they won't simply get it behind them acting before many possibilities that would eliminate the need.
Why would they act in this manner. At the higher price they'd achieve they'd be more inclined to dilute, though hopefully they'd wait for positive news to do so. While I certainly hope I'm wrong, if someone can show me where they're bound to not do it until they must, I'd much appreciate it. Otherwise, I believe the positive vote enabled the board to use its best judgement, and I'm not certain we individual investors will like what they do.
Gary
They really only must act by November, and one possible act would delay that 6 months more. If they do the R/S before that it's because they want to, not that they must.
Gary
Charlie,
If we're speaking of the reaction to good news on the Cancer Cachexia trial, the FDA has little to do with it, at this time.
The company would no doubt speak with the FDA about the course of action from the Phase IIa Trial, the next step might be simply a Phase IIb that expanded on the IIa. With any luck, in that their is no currently approved therapy the FDA will either permit the Phase II to be registrational, i.e. the potential for approval would exist in the smaller Phase 2, or they might want the company to immediately jump into a larger Phase III.
I do believe that the shock value of having a drug that should be approved by 1st half of next year suddenly go from Niche potential to Blockbuster would dramatically increase the stock price.
To begin with, Big Pharma would immediately take an interest in the drug, and with any luck 2 or more of these companies would either be bidding for the drug, or perhaps even the company. If successful, a partnership should bring in perhaps 9 figures up front and royalties in the teens or higher. It still may take a couple years for approval in Cancer Cachexia, but with additional data, and approval in diagnosing HGH deficiency, off label use would ramp up dramatically so by the time actual FDA approval came it wouldn't change dramatically as insurance companies and HMO's, etc would already be authorizing its use.
I frankly believe that a buy in at $100,000,000 or more to partner the drug is very possible, and that much money, with the promise of far more to come should warrant a share price in the double digits with the current O/S, should the R/S be done, it would be far higher, depending on the O/S at the time.
Gary
While I can agree with much that's said, I believe they're paying little attention to AEZS-130. First, approval first half of next year is very possible if Priority Review is granted, that could bring $1 or more to the share price. Even before approval is granted, which it should be, the outcome of the Phase IIa should be known in Cancer Cachexia. Right now this is the most overlooked trial I've ever seen.
While most trials require years to determine safety and efficacy, I believe safety issues were settled previously, so largely this should be about efficacy. How do you determine efficacy in a Cancer Cachexia trial? A good digital home scale should be about all that's needed. If patients continue losing weight uncontrollably, it's not working. However if some patients stabilize their weight, or even better, gain weight if the need to, it's working like a charm for them.
This sounds so simple, but the truth is, many cancer patients lose weight uncontrollably, and ultimately this weakens them to the point that organs fail well before the cancer kills them. Cancer caused the problem, but their is currently no treatment for Cancer Cachexia.
Perhaps there is little regard for this trial because nothing in the past ever worked, so there is little faith that it will. That may prove correct, though preclinical work substantiates a reason for running this trial. What if it works? A niche drug suddenly has major blockbuster potential.
Gary
Nice movement today, anyone heard a reason, I've not seen one.
I believe the stock is very undervalued, just one bit of really positive news could lead to an immediate double or more from where we are today.
I'll be out sailing till Labor Day, Newport, Avalon, Cat Harbor, though I'll have the net most of the time, I won't be spending much time on it.
Labor Day traditionally marks the end of the Summer Doldrum's in Biotech, hopefully the Fall brings the stock to $1 or more without a reverse split.
Gary
I believe it's an open trial that they could report on by Fall. The thing about trials like this is companies don't talk about them until trial results are subjected to peer review either by presentation at a technical conference, or acceptance and publication in a technical journal.
There is no telling when such a peer review opportunity will present itself. In some cases, major conferences like ASCO require Abstract submissions many months before the presentation. The company, on the other hand, might say that they're encouraged by the trial, or something like that, which is a non technical indication of efficacy, without compromising the data which hasn't been peer reviewed. I know this drives investors crazy, but peer review before discussions with investors is a policy that's not violated by credible companies, the Pinks are a different matter.
Gary
Far more Institutions have $5 as the minimum that they can buy into, however Institutions buy stocks they're not supposed to all the time. They do it by buying on or after the first day of a quarter, and if the stock doesn't comply with their buy requirements during the quarter, selling by the last day.
Companies on the other hand who've done reverse splits often cite Institutional buyers as the reason for maximizing the price, i.e. using the maximum permitted ratio for the R/S. It's rare this reasoning works as investors, unhappy with their actions bail out, and the price action is generally down, not attractive to Institutions other than those that are looking for stocks to short.
I'd agree with a board that puts the price between $1.50 and $2. Setting it closer to $1 than that risks investors bailing out short term and still not meeting Nasdaq requirements. The real key to meeting Nasdaq requirement is good news. Should the R/S occur just before, or after really positive news is revealed, it almost surely will be successful. On the other hand, I've seen splits initiated at roughly $5 that were under $2 in months because of no news, nothing negative, just nothing positive either.
AEZS has the possibility of several positive things occurring, however for anything positive there is also a potential negative outcome as well. Positive results in Cancer Cachexia could be huge, I don't place a great deal of downside risk, as most people are not expecting it, but it certainly would be viewed negatively. AEZS went for Priority Review on AEZS-130, if they receive it, it's positive news, but if the FDA says no, that's the risk they take.
The Perifosine MM Trial has 3 potential outcomes. I'd put the likelihood of the board recommending continuation of the trial at perhaps 95%, this should be viewed positively, but there are always investors who demand perfection, i.e. halt the trial for efficacy at the first peek. Odds are probably no more than a couple percent of this happen, and likewise halting the trial for futility. There are currently several Perifosine trials going, while AEZS only committed to the MM Trial through the first peek, you know they'll take it all the way if that's what the monitors recommend, it would be foolhardy to do anything else. Of course they may try to partner North America, or even more, again, but the point is, the trial shouldn't be stopped unless the monitors say so.
Starting AEZS-108 in Phase III is still a positive, but everyone knows it will happen eventually, so I can't say it's big news, but certainly positive. Downside there has to be years out if results fail to meet expectations, but all the evidence says they will.
My point is there is a lot of potentially great news for this company. I doing a reverse split is a must do, it should be done when positive news will reinforce why things are good and maintain a positive outlook for the stock. If no positive news is anticipated, I'd hope they aren't forced to do it by Nasdaq deadlines, remember, they can request a 6 months extension taking them to May 2013.
Gary
Now they have the authority, lets see how they use it.
If they wait till it's actually needed, if ever, and only use what's necessary to achieve a share price no higher than $2, I'll accept managements decision. On the other hand, if they quickly do the R/S and go for the highest possible price, i.e. 1 for 8, I'll strongly object to their actions and if I remain invested will probably be a thorn in their side.
With the outstanding shares over 100K a reduction to levels between 50 and 25 million might be considered reasonable. Reducing the O/S below that point is practically an invitation to dilute the share to at least that level. Of course I learned that their have been no restraints on the company before, and that continues to be the case. Dilution itself isn't the problem, if management has provided substantial reasons for it being necessary. However if a company's record is dilution as a way of staying in business because everything else they do fails, then they must be viewed a failure and investors are cautioned to stay out no matter how positive management says their next effort is.
I don't see AEZS's management as a failure. I know they've developed one approved product, strongly believe we'll have a second by next year. If they weren't aggressively moving other drugs forward the revenue from what's soon to be approved could provide earnings that would greatly elevate the stock. The fact is that they have several other promising products and positive earnings will probably still be at least a few years off. Dilution may be required to keep full development going, however if it's leading to approvals it will be worth the price.
Gary
Regretfully I've learnd the Reverse Split was passed, here's a link:
http://sedar.com/CheckCode.do;jsessionid=0000ddLheKlC3ZOKoIyDKNUjM2l:-1
I only hope the company doesn't rush into it, and that they use no larger ratio than needed for a price in the $1.50 to $2 range.
I hope I'm wrong, but I suspect they'll go to the higher end of the scale, 1 for 8 and justify it by saying they're searching for greater Institutional investment. This argument proved bogus in other stocks that have done it, I hope it's not the case again here.
The way to get Institutional investment is by growing the price and sustaining that growth, not by a reverse split to achieve a particular share price.
I really still like the technology represented by the company, but I won't like the company as much if they do a reverse split before it's absolutely needed or is larger than needed to remain on the Nasdaq.
Gary
This could certainly be anticipation of what will be revealed in the Quarterly, tomorrow's webcast, and the outcome of the Special Meeting.
It's my belief that if investors thought the reverse split was passing, the stock price would be weak. Whether anyone knows or not, I believe today's price suggests the Reverse Split fails.
Should this be the case, with the stock nearly at $.50, I believe we'd see $.60 or more rather quickly if their is nothing negative in the Quarterly report. I wouldn't be surprised if sales in their approved product are higher than ever. They may have raised more money as well.
The market closed, we're above $.50 for the first time in ages. Perhaps we'll learn something on the quarterly release, that could come any minute.
Gary
If they should win this vote, I believe it's a clear indication that in spite of over 100 million shares being issued, a majority are held by a group of people loyal to whatever the company wishes to do. I've not yet seen one investor who posts who's indicated he's for the reverse split on these terms.
In my honest opinion, they weren't fighting to get this approved. I believe they put it out there very early to wake up investors as to what could be necessary. If they were fighting for approval, they'd have discussed the measure with investors before the proxies even came in the mail. They'd have held the Quarterly weeks ago to reinforce the reasons they need a positive vote.
I believe they either know it's a lock, or they put it out as a wake up call. If it fails, I believe the stock price will be up to at least the $.50 range, perhaps higher. If it succeeds however, we could see new lows for the year sending the price well below the cash value of shares.
For the long haul, drug success will reward us well, even if a reverse split is executed, however, I still believe we'll do far better if there is no R/S. Why? Because dilution is more easily justified when the share count is smaller. A company with over 100 M shares might go to 200 M over time, so doubling the shares may be acceptable. On the other hand a company with 25M shares has little problem reaching 100 M, far greater dilution in spite of the substantially lower share count.
Gary
They'll have the answer on whether they can do the reverse split on the terms presented next Wednesday. Frankly, I think they could be defeated as they've not justified this proposal at all.
Originally I believe they intended to speak about it at the Quarterly, before the Special Meeting, but they failed to do it. The Special Meeting is the same day as the Quarterly Webcase, only those in attendance could vote that day, all other votes must be cast at least the day before.
I certainly would support a reverse split over Nasdaq delisting, but it's far to early to make that decision now. With a six months extension, which should easily be achieved, we could make this decision in March of next year and still have months to make it happen. I would also want the terms changed more in line with terms I've outlined before.
If the vote does pass, it's an indication to me that the company has nearly complete control, even though few share are owned in Institutions. Virtually all the investors discussing this on various boards have indicated voting against the measures.
Gary
Something was clarified for me by emails with the company, Authorized Shares are unrestricted. I may not like it, but if they're unrestricted now and a reverse split is done, applying the same ratio is meaningless, they're still unrestricted. This isn't something I like in the company, and frankly I'm surprised that exchanges like the Nasdaq permit it, but in that they do, I'll stop pushing for reducing the A/S.
Gary
Guys, I really believe they are concentrating on the science, long term. Doing an NDA correctly is far more important than doing it quickly. It would be nice if they could do both, but they really are a small company with limited resources to put on this, or any other tasks.
As for the Phase III for AEZS-108, the companion diagnostic really is the right approach to take for a few reasons. The biggest is that with better identification of those who'll benefit, they'll get better results. As I understand it, the companion diagnostic will also be dramatically cheaper than what's been done up to now to identify the appropriate patients. The lower cost has several advantages, to begin with, it brings down the trial cost. After approval it will make it substantially cheaper to determine if patients are suited to the drug, this should make getting insurance companies, etc, to fund the test far easier.
Certainly, it would have been great if the companion diagnostic was developed months, or even years ago. As I see it Roche, who owns the company doing the work, is doing it to profit from its use. I'm uncertain if AEZS is paying for the development at all. The point is, Roche has examined the trial results to date and made the determination that approval is likely, so they'll be well rewarded for building the diagnostic. Frankly, I hope they're not being overly optimistic in saying it can be done this year and the Phase III Trial started.
My point is that as long as these things happen close to the company's schedule, they'll happen before next May. If AEZS needs to they can get an extension of Nasdaq requirement that takes them to May 2013. I don't believe a reverse split is needed until it's been found that all these things, and others, are not enough to put the stock at $1.
Frankly, I believe the stock could go above $1 any day Cancer Cachexia results are revealed, if they're positive.
Gary
My problem with them is that in the past, every time I've seen investors agree to an R/S, it has happened almost immediately after it was voted. I'm a strong believer in managements plan to develop many new drugs, I believe their pipeline is their strength. That said, at times I feel they're too quick to pull the trigger when it comes to financial issues, be it offering, or things like reverse splits.
I wouldn't care about voting to authorize an R/S now if the provisions were in line with what I've laid out before. I.E. not till the last possible minute, no more than needed to get the price to $2 or less, and a similar reduction in the Authorized Shares.
I'm not saying they must go to the very last minute before delisting will occur, but they could certainly hold the decision until a few weeks or less as long as they have the authority to do it. Clearly the rule requires trading for ten days at over $1, so they must do it 2 weeks before a delisting action, but I see no reason to do it a month or more before.
Gary
Pete,
I've seen few that have been voted down, but I've seen several that were pulled back when the company realized they would be voted down.
I believe the company was premature in doing this, and perhaps they did it intentionally to get investors thinking about what may be necessary in the future.
I suspect the company can determine how the voting is going at practically any time after the proxies have been sent. If they don't like what they're seeing, they'll reconsider the action.
I'm not saying actions shouldn't be taken to stay on the Nasdaq, I just believe it's too soon for such actions, and personally I won't support a reverse split that doesn't in some way address lowering the authorized shares as well. I'm not suggesting no dilution be permitted, but if the O/S is reduced to say 25 M shares I see no reason the A/S needs to be greater than 50 M shares. As the companies actions increase the share price dramatically, and some of those shares are used, I believe they'd have little difficulty getting investors to raise the A/S to say 75 M.
Investors don't want to limit a company's ability to operate, but dilution to ten times the current O/S is unreasonable, so the company shouldn't have nearly that many shares available. I know many companies where this wasn't controlled, and clearly they took advantage of it. I've got to believe that insiders in those companies controlled sufficient shares to make that happen. I don't believe that's the case here.
Gary
Does anyone know how many shares are currently authorized.
I email the company and asked that question over the weekend, and have yet to get an answer. I wouldn't be surprised if they're being besieged as shareholders received their proxies.
They should announce a quarterly webcast shortly, they previously indicated the reverse split would be discussed in detail then.
Gary
Pete,
I really don't know why you believe it will pass big, as I see it the company doesn't have major institutions or shareholders that should vote as the company dictates.
I could certainly be wrong, but without a clause that lowers the authorized shares proportionate to the R/S I encourage investors not to support it. If the company performed well in the future, had a dramatically higher price, and justified a share increase I'd have no qualms about granting it in the future.
I've seen the result of reverse splits where the authorized shares were unaffected, the result often being a series of reverse splits and new offerings paying to keep the doors open, while investors are being screwed. The most dramatic case is Genta where what was once a half million shares worth millions is now a single shares worth under a penny. I can only assume the company always controlled over half the shares, I don't believe that's the case here, but if no restraints are place on issuing shares, it could be.
Gary
Pete,
I've never seen a company who's managment was praised after a trial failure, nor have I seen a company who's management was criticised after a trial success.
I believe management is doing what's right long term for the company. I disagree with their R/S Proposal, but don't know the boardroom strategy they had for proposing it.
As a Devil's Advocate, I wouldn't be surprised if they put it out their now, expecting it to fail, but conditioning us to accept another proposal closer to the deadline if it's still necessary then.
I believe that management ought to be permitted to speak more frankly with investors, however between SEC, FDA, and other regulations as well as attorney's who'll sue for almost any reason, companies never really discuss what's behind everything they're doing. What I like about AEZS's management is they've managed to develop many drugs and bring them through the clinic without exceptionally early partnerships where nearly all the value goes into the hands of the partner.
While I doubt for the immediate future that any drug will go totally unpartnered with world wide sales achieved by the company. That said, if AEZS-130 doesn't prove effective for Cancer Cachexia, it's not impossible for a company the size of AEZS to fill the need for it as a niche drug.
Gary