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Received this email from David McIntyre CFO/Avita this afternoon in response to my email to Avita this morning regarding the reverse split:
Hello Jeff
Thanks for the email and the feedback.
I'll do my best to answer your questions. Here are some key considerations:
1. Avita presently has 2.1 billion ordinary shares outstanding. Even by Australian standards that number is incredibly high - actually there really is no comparative at that level. The reverse split will reduce shares on issue down to ~21 million shares of common stock.
2. If you look at other companies out there who are within one year of IPO on NASDAQ (our first anniversary is coming up in October) then you will see that most companies have about 20 to 30 million shares outstanding. The reverse split will put us within that bracket.
3. A typical IPO price range is north of $15, obviously subject to valuation.
The combination of the above was the ratio that you now see - a 1 for 100 reverse split and a new ASX:NASDAQ ratio of 5:1. So that part was straight math, benchmarking and a discussion with sell side analysts etc.. Ultimately this will generate a price range of about ~$8.5 on ASX and $27 on NASDAQ.
In saying the above, the Scheme is being recommended to align our corporate structure, to remove the burden and risk associated with forthcoming dual compliance and to broaden the access within the United States. Jettisoning ADR's in the US will make things easier - including research - for investors. Editing the exchange ratio or capitalization profile was "added" to the above to bring us more in line with peers.
I'm not sure that I answered your questions.
Regards
David
Ctrxman, Excellent post. As a clinical-stage biotech investor for the past 20+ years, I concur about the reason behind most reverse splits. Most are about imminent delisting. Not an issue here. There are landmines, such as dilution and short attacks in many of those cases. What certain bashers here don't say is that Avita, given its current cash position of $129 million, has absolutely no capital issues and likely won't for at least a year. So this RS is not about setting shareholders up for dilution. This is not a pump. It is merely fact. Thanks for sharing your views.
In Dec 2018, when share price was $1.06, you screamed at people that the stock was going to zero and to sell it all if the shares ever reached $1.30.
So no RS?
No, I believe they'll continue trading on the ASX.
You're embarrassing yourself, Justin. Real people are getting sick and dying. This hoax to bring down the markets is working so well that Italy has quarantined their entire country, major American sports league seasons are being cancelled. the NCAA tournament has been cancelled. Schools across the country are being closed. Broadway has gone dark. But yeah, it's all some hoax.
31 million traded on the ASX last night as well. Given the early big drop and the comeback to, essentially, the hod it felt like at least a temporary washout to me.
I sold shares (approx 12% of my holdings) to cover my initial cost. I never intended on buying them back. Then again, I never expected this level of price drop. Sometimes one has to adjust one's thinking.
Fwiw, I bought back the $10.67 shares I had sold for $7.51 now.
My guess is the panic low today at the 200DMA is probably the low, though it very well may be retested. As for Japan, your guess is as good as mine. The coronavirus, and its effect on global markets, complicates things in the short term.
Good move, Rob. Panic selling everywhere. Everything was getting thrown out this morning. The time to step in was at the 200DMA. We may retest, but we know where the line in the sand is drawn.
If RCEL is going to hold, it's going to hold right here at the 200DMA $7.50ish.
If I could recommend this post, I would. Kanye's self-aggrandizement never disappoints.
Hi Jugs...To be clear, I was referring to our resident troll.
Like the great bard, Shakespeare, wrote in Macbeth:
"It is a tale told by an idiot, full of sound and fury, signifying nothing."
Sage advice for Kanyes everywhere: "Better to remain silent and be thought a fool than to speak and remove all doubt."- Abraham Lincoln
Hi MONYMAN, My guess for the pm volume is that Jim Cramer was asked about Avita by a caller on his show last night, had positive things to say and "blessed" a buy.
It's early, but AVH is up nicely.
May not happen tomorrow. Interesting, AVH is up in early chi-x trading.
Kanye is like every narcissist I've ever known. He takes credit for everything and responsibility for nothing.
Hi Jugs, I can't pm but got it. Thanks.
Fwiw, I've been trading and investing in clinical-stage biotechs for the past 25 years. In my old(er) age, I've gone from mostly technical trader to strictly investor. Through a great deal of experience, and having made my fair share of mistakes along with my successes, I think I know a few things about what makes for an attractive small-cap bio and how they trade. I try to add value where I can, and keep to myself otherwise. I'm certainly not like some narcissists that need to show their false bravado, thinking it makes them look smart. Newsflash: It doesn't. It just makes them look weak and desperate. They add absolutely nothing of value. And every message board I've ever taken part in has had one or two of them.
At this stage of my life, I have neither the time nor inclination to put up with it. I'm more concerned about helping people be successful. As an investor, knowing what you own is, and always has been, lesson #1. It ain't about board personalities constantly proving to the members that a lack of humility is a very bad look. People have different goals and varying strategies but, ultimately, it's about your investment....Period. To presume to tell anyone how they should trade, and to insult them if they don't do what you tell them to do, is the height of immaturity. It's..About..Your..Investment...PERIOD.
And, with that, I'll step off my soapbox. I'm sure Kanye will have something to say about me. I'm sure it'll be sarcastic and insulting. Unfortunately, since I've decided to remove toxins from my life, Kanye will be speaking mainly to himself.
Thanks for the indulgence.
Nahhh, Kanye is too busy patting himself on the back, after the fact, for a call he really didn't make, a call he didn't trade on, and about all of the fake people who supposedly congratulated him privately on his obvious genius. While still managing to insult everyone else here in the process. This is why I call him "Kanye".
Hi Jugs, Got it. Thanks.
You stole my intended reply, Ctrxman..lol. Kanye always boasts about his supposed trades after the sp has already made its move. Never ever in realtime. He insults investors by calling them "moon boys" (I notice that THOSE attacks are left unchecked by the mods). Kanye may be a genius in his own mind, but he's a joke to me. Nothing but bluster.
I agree and am not a trader in this one. Just following the technical patterns since $1. The stock has traded in ranges since. $10, other than a round number, has really been the top of this range even though it hasn't actually been hit (close enough). Breaking through with a quick move to $12 would likely send fast money taking profits and bringing sp down to support (which would previously have been resistance). For investors like you and I, these retracements have been opportunities to add. Yes, a buyout would void the technicals and send sp much higher.
If I may speak for Kanye, if there is a quick move to the $12.00 area, a technical retrace to the $10.00 area would be my expectation.
I triple dog dare 'em...
You must be reading my mind. Hopefully, the pop wasn't, in part, shorts doubling down.
The PSAR dropped on volume today. The MACD just crossed into positive as well. I suspect there will be follow through to this breakout in the coming days..
That would be my guess as well.
Melody, did you notice that over 40 million shares have already traded on the chi-x in less than an hour? I wonder if it's those shorts covering. It doesn't appear that anyone's noticed on HotCopper. I don't have an account. Can you post it over there?
I'll also concur. I haven't emailed the company in awhile, but when Dale was the CFO he generally responded same day to my emails to him. And I am definitely NOT a company employee nor a cheerleader. Perhaps Mike's problem in receiving a response is his disrespectful combative tone.
I've assumed it was front-running the opening here after big moves overnight on the ASX.
Hey Steve, I'm spectacularly horrible at giving price targets attached to timeframes, so we'll all be better off if I leave that to others like Tdeck.
I was watching the AH trading last night and had the same thought myself. Once the SP hit the hod, there was size on the ask, and every time it dropped, the seller (or shorter) kept walking the ask down at each tick until his sizable ask volume disappeared. I noticed it happening from the low-mid $9's all the way down to about $8.25. It was very visible and relentless, and only made sense that it was someone trying to drive the SP down. My assumption was someone was taking advantage of a quick unsustainable spike.
Technically speaking, huge volume on "good news" that doesn't push SP higher isn't viewed as a positive. The churn tends to bring in profit-takers. Either way, it's just short term action.
AVH was unchanged overnight. Since SP ran up here yesterday in anticipation of Cramer's show without commensurate move the night before on the ASX, I would expect SP to drift down a bit today to better align with AVH.
Paid bashers are a real thing. The good news is StLXer is the very best contrary indicator. Every single time he shows up, the SP bottoms within 48 hours and then moves to new highs. Personally, If I were StLXer I'd be embarrassed to show my face around here. But to each his own.
Hezekia, I believe the only person you're upsetting is Miketrav. Apparently, he believes the nonsense that someone can effect share price by posting here. That's his problem, not yours. Truth is, I've stopped reading Mike's posts. I find his hubris tiresome. Whether the "Mad Money" appearance happens..we'll see. I certainly hope it happens. But after 30 years of investing in small-cap clinical stage biotechs, I don't ever make buy/sell decisions based on what I read on a message board. Please keep posting whatever you find. Your contributions are appreciated.