A2-73's next trial will be pivotal, I expect, a combined phase 2 and 3. How much it will cost will depend primarily on its design and the minimum number of subjects, which will remain unknown to us until the IND is submitted to clinicaltrials.gov. The design is crucial, and that is where some of our current board of science advisers will earn their their stock.
Dr. Missling has made it clear he intends to partner with someone on A2-73 for Alzheimer's, but I have not heard from him whether that is during the pivotal trial or before and after. I suspect Missling is considering both options.
I do not have the negative opinion of Lincoln Park Capital that many people seem to have. Their very high-risk investment of $10M in Anavex is what allowed us to start the phase 2a trial and make other progress on the pipeline (especially epilepsy), and getting us to where we are today. Prior to the first deal with LPC, Anavex languished over a year after completing the phase 1 trial. As both an investor at that time and as an MCI patient hoping to avoid Alzheimer's, that was a very frustrating wait.
I suspect most animosity directed against LPC is because LPC invests in many companies, and some of them go under despite the capital infusion from Lincoln. The angry and disappointed stockholders of those companies want someone to blame, and some of them make LPC their scapegoat. Third parties trying to tarnish Anavex with guilt by association have condemned Lincoln for investing in companies that later failed, but that happens to all providers of corporate capital, from angel investors and VC's all the way up to JPMorgan. If there is any evidence of LPC doing anything to damage a company they invested in, I am unaware of it. The $10M deal between Lincoln and Anavex has certainly caused Anavex no harm, and it has provided enormous benefits.
The terms of the $50M deal with Lincoln are basically the same as the terms of the $10M deal, except with 5 times the cash for Anavex and 5 times the monetary risk to Lincoln. This time, however, Lincoln's functional risk has been dramatically reduced by the spectacular phase 2a trial results to date.
The leverage Missling has acquired from the $150M line of credit is that it puts him in a position of strength as opposed to desperation.
One thing I do not know is why Anavex chose two tranches, $50M with Lincoln and $100M direct, as opposed to $150M in one or the other. My guess is that Missling and Skarpelos chose to honor Lincoln for making that first, much more risky loan, by giving them an opportunity to participate in this round of funding, and Lincoln chose $50M, and the remainder became direct. I believe Skarpelos appreciates successful performance, and I see very successful performance from both Missling and Lincoln Park.
AI
