Anavex Life Sciences Corp (AVXL)

[apostrophe]

re: "... bloodbath in the biotechnology sector yesterday... Now I don't what to think! Is it Greed or Marketing or Cost? "

Health care cost keeps going up. It is now about 19% of the US economy. Too bad it's mostly fluff.

http://www.bloomberg.com/news/articles/2012-06-13/health-care-spending-to-reach-20-of-u-s-economy-by-2021

I think the sector can thank price-gouging poster-boy Martin Shrkreli, not for jacking up the price, but bragging about it. Now people are starting to realize it's a widespread practice. People are outraged. Makes for great politics. Direct some wrath at obvious offenders, win a lot of votes while directing attention away from your biggest benefactors. Great stuff.

from the article:

"The problem is that Mylan has been jacking up the price of the EpiPen. A two-pack of the injectors now lists for more than $600... "

The thing is, the active ingrediant is Epinephrine, the actual product delivered to the bloodstream is a hormone and not patentable. The actual retail cost of a dose is probably a dollar or two since there is presumable enough in one bottle for many doses.

from another article:

"I paid $5.89, cash price for this (bottle of epinephrine), no insurance required," said Dr. Romanello. Less than $6 for the life-saving medicine. Add an Altoid tin and syringe and you've got an epinephrine injector kit for under $10."

http://www.americanthinker.com/blog/2016/08/epipen_too_expensive_you_can_get_the_same_dose_for_ten_bucks.html

One would think that if medicines were getting better, people would be getting less sick and health care costs would be going down. Instead we have the opposite. Investing in a bubble while it is inflating can pay off, but likely some investors (and fund managers) are starting to be concerned about hints that the bubble might burst, so are cutting back in case the sector turns really sour.

I suspect that there is still currently a sizable short position in AVXL and that the covering process so far, with the necessity of doing a little minor shorting to hold the price down, hasn't yielded a lot of net shares being shaken loose from retail. They need a new infusion of fresh shares which is why I get the impression of waiting with bated breath for Anavex to be compelled to do an equity raise. It must be frustrating to watch Anavex taking their time about it. Meanwhile, after observing the big (200k) absorption block on the bid Friday, it looks like certain funds may be helping their cause by pulling out of the sector a bit.

As much as some if us may be irked by getting slammed by short sellers, the sooner thay are able to finish covering the sooner they will the let price start wandering back up.

Also from the comment section of the article you submitted, another reason we have a sector bubble:

" ...For every $100 Dollars of Corporate debt, Corporations now only have $15.00 Dollars in cash to service that debt! Corporate America is drowning in debt, unlike the Government, this debt must be paid back!! With an economy not growing fast enough, (or not even at all in real terms) where will the money to pay back the debt come from?? This is true for 90% listed Corporations!!

http://www.bloomberg.com/news/articles/2012-06-13/health-care-spending-to-reach-20-of-u-s-economy-by-2021

By comparison, Anavex has no debt overhang. Which is remarkably good for an early stage company. At least we are not contributing to the bubble. Also, I think that Anavex will not be tempted to resort to price gouging, they will be able to do quite well charging a fair price. I don't know how much 2-73 costs to produce, but the thing about small molecules is that they are, well, small, and relatively simple compared to many other bio-chemical compounds that are highly complex. I therefore expect that 2-73 is not all that expensive to make. It will be affordable for a huge market.