Anavex Life Sciences Corp (AVXL)

[F1ash]

I doubt, other than appropriate lot sizing, LPC holds ANY of
the shares longer than it takes to divest.

A straddle in AVXL would be a losing strategy over any 1-2 month
time frame in the last two years......perhaps you could find an exception.

Second part first. No I can’t. I don’t do options. (Also why I don’t short stocks, only a reckless investor shorts without upside protection imho)

Now to the first part:

I have learned a great deal about these LPC type financing agreements from Anavex’s filings.

Ex. “The Company previously filed a registration statement on Form S-3 (File No. 333-207600) on October 26, 2015, which was declared effective on September 6, 2016 (the “2016 Registration Statement”), which registered for sale by Lincoln Park up to 6,754,609 shares of our common stock issued or issuable under the Purchase Agreement, inclusive of 269,397 shares of common stock issued or issuable to the Selling Security Holder for no cash consideration as commitment shares.

6,633,656 shares of common stock registered under the 2016 Registration Statement have been issued to Lincoln Park and 6,475,575 have been resold by Lincoln Park as of the date of this prospectus. No commitment shares are being registered under this prospectus.”

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=12271363-953-95847&type=sect&TabIndex=2&companyid=660924&ppu=%252fdefault.aspx%253fcompanyid%253d660924

What I learned.

Apparently both parties know exactly what LPC is doing with their shares as they purchase them. (Because this information comes from Anavex not LPC). I didn’t know that.

Notice how they have roughly the same number of shares unsold as the original “commitment shares”? I believe that’s probably because they use those to sell on the day they are required to purchase shares. They get to purchase at the lowest price at any single point during that trading day (or lower of previous 10 days if memory serves). So why not pick a slow period during the day and create an “artificial low” for your required purchase price?

A lot of people assume this means LPC type companies want to decrease the share price of their clients (toxic financing). I don’t believe that’s the case. Remember they want to sell those shares the next day for more than they paid so they don’t want the share price to decline. They would love to see it increase on that day.

If I understand the model correctly, since they get commitment shares at the beginning of the contract, technically they would need very little of their own capital for these agreements.

All imho only of course.