Anavex Life Sciences Corp (AVXL)

[F1ash]

Ok folks. Time to take a deep breath and understand what the Cantor agreement actually means for Anavex.

I imagine most here probably have me in the “basher” category. I prefer to view myself in the “let’s get this right” category. So let’s get this right then.

The intent to have the ability to raise $100 million dollars was actually announced way back in 2015.


“As filed with the Securities and Exchange Commission on October 23, 2015”

PROSPECTUS

Anavex Life Sciences Corp.

$100,000,000 of Shares of Common Stock

https://www.sec.gov/Archives/edgar/data/1314052/000161577415003018/s102056_forms3.htm

Now, of that $100 million, $50 million was authorized to be sold to LPC.

“$50,000,000 of Shares of Common Stock and 269,397 Shares of Common Stock Offered by Selling Security Holder”


Now here is an important part...

“At March 31, 2018, an amount of $16,683,157 remained available under the 2015 Purchase Agreement”

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=12746138-964-109326&type=sect&TabIndex=2&companyid=660924&ppu=%252fdefault.aspx%253fcompanyid%253d660924

So in three years the $50 million authorized dilution was still not fully implemented.

Most here seem to think this new Cantor announcement is a negative development and means $50 million of dilution is happening “right now”, but as illustrated above, it could be implemented over a number of years.

I personally would put the Cantor announcement in the positive development category. Here’s why:

Anavex management still retains the ability to determine when and how much dilution they allow to happen. This is not an announcement of $50 million of dilution. It’s an announcement that Anavex now has access to $50 million dollars in capital, if and when they want to access it.

We have entered into a Controlled Equity Offering SM Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald, pursuant to which we may issue and sell up to $50 million shares of our common stock, $0.01 par value per share, through Cantor Fitzgerald, acting as sales agent”

I’ve been attempting to get folks to understand for months now that the LPC agreement was an ELOC and not an ATM.

Here is the difference. Under this agreement Cantor does not purchase the shares from Anavex and then resell them into the market for a profit like LPC does. Cantor would instead sell shares for Anavex directly into the market on Anavex’s behalf . A real life ATM!!!


“Upon delivery of a placement notice and subject to the terms and conditions of the Sales Agreement, Cantor Fitzgerald may sell our common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on the Nasdaq Capital Market or any other existing trading market for our common stock. We or Cantor Fitzgerald may suspend the offering of our common stock upon notice and subject to other conditions.”

http://secfilings.nasdaq.com/efxapi/EFX_dll/EDGARpro.dll?FetchFilingHTML1?ID=12851983&SessionID=zQJoUxvsotMLr5X#S111202_424B5_HTM_A_001

Instead of making money in a way that invites price manipulation like LPC, here is how Cantor get paid.

“We will pay Cantor Fitzgerald in cash, upon each sale of our common stock pursuant to the Sales Agreement, a commission in an amount equal to 3.0% of the aggregate gross proceeds from each sale of our common stock. Because there is no minimum offering amount required as a condition to close this offering, the actual total public offering amount, commissions and proceeds to us, if any, are not determinable at this time. We have also agreed to reimburse Cantor Fitzgerald for certain specified expenses, in an aggregate amount not exceeding $50,000, including the fees and disbursements of its legal counsel. We estimate that the total expenses for the offering, excluding compensation and reimbursements payable to Cantor Fitzgerald under the terms of the Sales Agreement, will be approximately $90,000.

Think of it like this if it helps.

Let’s say you want to sell your house.

LPC would buy your house directly from you and try to make a profit by selling it to someone else for a profit.

Cantor on the other hand would be like a Realtor. They would sell your house at the highest price possible to someone else and make a 3% commission on the sales price.

If you wanted to get the most money for you house which method would you choose?

I hope the choice and the reasoning behind the choice are obvious!

What actually happened is that Anavex has cut out the “payday lender” type LPC agreement and replaced it with a much more preferable way to Capital access when they deem it appropriate.

In reality since $16 million is still left from the LPC agreement this new announcement could only represent $33 million in additional expected dilution instead of $50 million if they only use Cantor from here on.

Hope this helps. There’s more to be said, but time for a break.