Anavex Life Sciences Corp (AVXL)

[Biostockclub]

Per specific requests and higher than anticipated interest, and since the board appears less clogged at present going into a weekend, here is the contingency piece many have requested and received privately, now made public. Don't wish to cause a gathering snowball effect, but perhaps the shared wisdom on this board will speculate us into some finer solutions or considerations - all greatly appreciated. And, as always, the bashers will make use of what they can, but true reasonable skepticism (which is healthy and never goes out of fashion) is not a problem. Have at it! My intent is to be insightful but not inciteful!! Bio -


New preface 4/21:
I am the AVXL representative in a biotech stock club. Therefore, I research the heck out of this stock to present its case to our club. If what I write gives rise to the notion that I am "overthinking" please keep in mind that what I present determines our club's position in this stock.
As Abraham Lincoln once said, "If you give me 6 hours to chop down a tree, I will spend the first 4 sharpening my axe." Could not agree more. It was in this context that I began researching Biogen's history when we entered the MTA. Then, the pulled data release, the poison pill, the lack of trial date info, no PD/PK, patent issues, the renewed emphasis on A3-71 recently, much greater volume of FUD hit the MB...the accumulation by Park West, eventually leading to today's very narrow (almost the Park West amount) defeat of the preferred shares.

Here are some thoughts to digest. FWIW - Bio


Original post (day after Oppenheimer presentation):
Since this subject has been bandied about a good bit, regretfully, I must shine a light on a dark corner of the company's potential future. No one likes to think about these things, or openly acknowledge them, but best to be prepared. - Semper Paratus

Not saying this WILL happen but if it even COULD happen, I would want to know and to try to fight or plan my personal contingency.

As I understand the current state of A2-73 patent:

We have a US Patent for A2-73 for a cancer/melanoma indication.

We are applying, and in the stages of approval/denial, for US patent for A2-73 plus (donepezil) for AD indication.

We have a little time left (?) on A2-73 patent in Greece (?) for (?).

The issue: When Anavex, Missling, et al, say we are covered patent-wise, I accept that in the context of A2-73 for AD. Fine.

Do we have any patent protection in US (or Europe, Japan, Australia) for A2-73 for any of the following indications (either alone or in combo):
Rett
Parkinson's
MS?????

Point of this question: If we do not, what stops Biogen from filing a patent for the A2-73 compound - a Sigma 1 receptor agonist based on our other patent applications - for MS? (Please, before answering, I urge you to read the Forward Pharma decision handed down yesterday).
Biogen was granted rights to FP's MS IP after a "generous" licensing lump sum and royalties were VOTED ON (in favor of) BY 71% OF FP's SHAREHOLDERS (a special meeting was called for this purpose only).

So, for 1.25B $ upfront and 10% of royalties (outside of US), the shareholders took the money and Biogen has seen $4B in revenue from this drug (not their IP!) Tecfidera, in last 4 Q's.

(Am trying to find out if an MTA preceded this but nothing turns up...still, you see where I'm going.)

(Also, trying to find out if Biogen has applied for an MS patent since having our compound in Oct. for a Sigma 1 receptor MOA. But, not my area of expertise. And even if they haven't, without the poison pill steps which the company is taking, they could file at any time, if we have not, and no FDA exclusive rights.)

Also, FP countersued for 20% royalties in US, however, in order to win that, they must prove that they can perform a successful trial with this drug ($$$$$). They are a small Danish biotech. (They can't - won't get the 20% US royalties) Sound familiar? NOTE: has since been defeated. Also, there are lots of recent articles on this recently settled case - did not include one - Google and take your pick or read several. That goes for all of the small biotech deals mentioned herein.

Poison pill - good idea.
Ironic, the shareholders voted to take the cash up front. (Realized 52% gain on their stock price, but company was a one trick pony.)

Are we not debating the same thing on this board? How much we would "settle" for? Are we giving them our numbers?? Showing our cards?

If they can get 51% (minus what has already been accumulated legally and declare once they hit the 5% threshold) of shareholders to take a buyout now...
(41M shares x 51% is roughly 21M - 2M already owned leaves about 19M to acquire. Assume $15/sh - since most people said they wish they had sold at the high of $14, and it's 2.5 times current guaranteed vs potential uncertainty - means they could get us in a tender for $285M. If some would sell, others, knowing this, might just hop on board just so they don't get left out. A lot of people who read this board know many of the traders will not hold as they are happy to sell at targets of $7 and $8. So, a lot would sell at $15, imo. The only question remaining for those who hold is will Biogen pull a Tucker and shelve the treatment or reap huge profits by bringing it to market? And if so, what do we get if we hold until they do? Missling would be gone. The Board and Macfarlane could go either way but doesn't matter in the final stages, imo.)

Maybe that's what the phone calls are about, gauging. (Never, personally, received a phone call before. As many stated, just vote or don't vote the big caps - usually there are no non-routine matters - just toss them. Imo, this is not boilerplate legal protocol.)

Maybe that's why no mention of the Biogen deal or any MS results so far?

Maybe that's why we are incorporating in Germany, and went to Japan, and possibly Australia?

And, keep in mind, if they acquire the company, they get ALL the indications, and A3-71, as well as our drug platform. All our assets become theirs - everything we own. (52% increase in FP share price. Do the arithmetic. You know what that tastes like? Tastes like compromise! Very bitter.)

But, this sounds paranoid and crazy. Any evidence of this pattern in Biogen's past?

Biogen also "collaborated" with Ionis for their IP and just gave them a $500M milestone payment (peanuts) - SMA drug Nusinersin. Meanwhile, Biogen reaps big profits - BIIB immediately rocketed the price to a well over industry high of $125,000 per dose or $750K/year !! (and not even their IP!! BIIB made up for the milestone payment on 7 patients in less than 1 year.) They, B & I, have 4 more deals in the pipeline to develop - CNS space.

Also, same thing with Neurimmune, Swiss research company spun off from university research, small, early stage. Biogen bought in 2007 for $32.5M upfront with possible milestones up to $385M (peanuts, again) and just started recruiting for a ph1 safety AD trial, 56 patients, in Feb 17 for BIIB076, a tau targeted treatment.

Did you hear Missling mention in yesterday's Oppenheimer presentation, "We don't have a lab anymore." Seemed like a strange thing to tell Investors at a biotech development presentation. (Unless you are downplaying your assets?)

Did anyone see the backup slides (they didn't present but just noticed they are on SA recap today)? A3-71 unbelievable preclin results. Never a mention of A3-71 in Oppenheimer presentation (listened 3 times). No 15 mos Ph2 results or PK/PD coming until after protection - would bet the house. No trials starting, until...after pill. Why should we do all the heavy lifting and let someone else eat our lunch? Even if this threat is not imminent (you must admit, lotta strange things to interpret not adding up), we must have this in place for the future - I think everyone agrees. (Consider this a "next-level-uber STOP LOSS" warning, in fact, with credit to Plato7 - it's the ULTIMATE STOP LOSS, and this time, we SHOULD place it.)

Biogen has money at the moment, especially if they do an end run and get IP on the cheap. (Anavex is a sitting duck without the poison pill.)

Link to SA article describing how "lucky" FP is to have its shares go up 52% on this move by the "savvy US company". Incidentally, please note, FP DID file patent 1.5 years prior to Biogen, it appears. (FP had mc of $836M. We could be had for a song.
It's a dog eat dog world, no two ways about it.)

http://epvantage.com/Universal/View.aspx?type=Story&id=682759&isEPVantage=yes

The thing to keep in mind about "funny business" and timing the world over:

"There's little to be known, and that not kindly,
But an ant will burrow through a two inch wall.
There's NOTHING RISES UP NOR FALLS DOWN BLINDLY,
That's a poor share of wisdom, but it's all."
(Nothing happens or is happening here by accident, imo.)

Imo, Seriously wise next step, Anavex divests all (non A2-73) pipeline compounds to Dr. Fisher for nominal fee. (Notice how A3-71 goes by AF710b in upcoming presentations now?) Divest, as well, the drug development platform. We retain a shell company to receive royalties from A2-73, then start fresh with new compounds/metabolites which Biogen has no claim to. Raise capital, establish patent protection, begin trials, burrow through a 2 inch wall.

If no data until after poison pill, PK/PD, plus intermediary efficacy report possible at:

International Bio Conference June 19-22 San Diego

AAIC 2017 London
July 16-20

Hoping the poison pill, a patent application, and a summer Conference might be our ticket?

And, not trying to cause a panic (I believe this will be well handled and we will be protected). Just speculating on some potential chess moves against us. That's DD, right?

Please chime in with any/all guarantees/likelihoods this can't/won't happen to us.

Btw, if I thought we had patent protection, I wouldn't have brought this up, which leads me to believe we don't and that others may be thinking the same thing as well. (CEO's read the paper, and play chess, every day.)


TIA Biostock

Post Script:
Wrote this the day after the Oppenheimer presentation. Did some research when something unusual hit my radar (I think I accidentally got a puzzle piece in the wrong box which presented a different picture.)
I've been watching how things play out ever since. Am contemplating my contingency plan as I'm sure everyone would want the time to do the same.

Interesting new info about the short percentage going up someone posted today. This fits right in - if Biogen is up to fishy business, people get wind of this. Word travels. The announcement of a hostile takeover would cause share price to drop initially until the price were mentioned. Or, Biogen is shorting to push price down to make tender offer lower.
Obviously, look for tender offer right after or even next week before/during conference to be voted on before ASM.

Also, google Kingsdale Advisory Group, retained to make the phone calls. They are proxy fight specialists offices in NY and Toronto. My call was from Toronto. They don't come cheap and they don't come at all unless there's a need. Proxy fight. Tender offer. BP knows we can't bring this to market (as we stand) and they can. Now, they announce they have 5 presentations at the conference and some are to showcase their Parkinson's pipeline. This is a pissing contest Missling can't win (unless he doesn't play...so he pulls our data, but then our stock price tumbles. Shorts have a ball...)

Tricky road ahead, imo. I guess where some see silver lining (10-15B$ offers), I'm seeing the cloud - pack of BP strong arm thieves.

Park West is acting as a proxy imo. They will accumulate for Biogen who will get us by tender offer (after 10% they must declare their intent) for a very small premium or they will apply for a patent and fight us in court with bigger guns (more expensive attorneys).
The shareholders' rights addition of a "right" to exercise per share is one slight saving grace - the acquirer does not get this, although it only doubles o/s shares and management can set the price term and condition. Remember, the tender offerer only has to reach a 50.1% majority of shares to have it all. That's why I suggest divest the good stuff.
Also, a tiny glimmer of additional hope, Missling is holding some excellent data as hostage, imo, for the proxy fight to raise the price. But, if we lose, he knows, I believe, that it is pointless to continue setting up and funding trials which will be approved but which we will not have rights to sell.

4/21: Additionally, Missling has been focusing on A3-71 much more lately either to make a better case for shareholders to vote the preferred, or to attempt to ward off a hostile tender offer by indicating we have something better coming along, or both?

Additionally, Biogen licensed BMS's MS drug this past week. So, that indication is heavily fortified.
They also licensed a BMS AD drug, they look to be building a CNS fortress (from a distant view).
NTRP's trial results, due next week, will be relevant to a likely grab for AVXL by BIIB, imo. Actually, positive results or not, but especially if not. All, imo.