We have entered into a Controlled Equity Offering SM Sales Agreement, or Sales Agreement, with Cantor Fitzgerald & Co., or Cantor Fitzgerald, relating to shares of our common stock, par value $.001 per share, offered by this prospectus supplement and accompanying prospectus. In accordance with the terms of the Sales Agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $50,000,000 from time to time through Cantor Fitzgerald, acting as our sales agent.
Our common stock is currently listed on the Nasdaq Capital Market under the symbol “AVXL”. On July 2, 2018 the last reported sale price of our common stock was $2.66 per share.
Sales of our common stock, if any, under this prospectus will be made by any method that is deemed to be an “at the market offering” as defined in Rule 415(a)(4)under the Securities Act of 1933, as amended, or the Securities Act. Cantor Fitzgerald is not required to sell any specific amount of securities, but will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between Cantor Fitzgerald and us. There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
Cantor will be entitled to compensation at a fixed commission rate of 3.0% of the gross proceeds from the sale of our common stock pursuant to the Sales Agreement. In connection with the sale of the common stock on our behalf, Cantor Fitzgerald will be deemed to be an “underwriter” within the meaning of the Securities Act, and the compensation of Cantor Fitzgerald will be deemed to be underwriting commissions or discounts. We have also agreed to provide indemnification and contribution to Cantor Fitzgerald against certain civil liabilities, including liabilities under the Securities Act or the Securities Exchange Act of 1934, as amended, or the Exchange Act.
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”
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.”
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.
The ' spread will no longer end up in LPC 's pockets but now will be share capital for AVXL RIGHT?
~Yes
Probably easiest to understand in metaphor form.
Your House = Anavex Stock from Shelf.
You want to sell your house so you can have capital to invest in getting your invention approved.
You could call the “We buy ugly Houses” folks who would buy your house directly from you for cash and then they would turn around and resell your house to someone else in order to turn a profit for themselves.
Or you could call a professional Realtor to list your house for sale and agree to pay them 3% of the sales price they generate by finding you a buyer.
Under which scenario would you generate the most capital from the sale?
ELOC financing (LPC) operates like the “Ugly House” people and ATM financing (Cantor) operates like the Professional Realtor.
Educated folks with nice houses tend to go with a Realtor and Uneducated folks with dilapidated houses are more likely to use the “Ugly house” folks.
It appears Anavex now views their house as too nice to use the “Ugly house” folks anymore.
“We have entered into a Controlled Equity Offering SM Sales Agreement, or Sales Agreement, with Cantor Fitzgerald & Co., “
“Our common stock is currently listed on the Nasdaq Capital Market under the symbol “AVXL”. On July 2, 2018 the last reported sale price of our common stock was $2.66 per share.”
And then, on July 3rd the volume spikes to 9 million shares, which was well in excess of the 500 k daily average. (Likely because Anavex announced the trial approval.)
Since the daily limit that LPC had doesn’t seem to be included in the Cantor agreement, it’s conceivable that a couple million of those shares could have been sold be Cantor on Anavex’s behalf if the Cantor agreement was already in effect.
Seems like a logical way to take advantage of the new ATM and immediately put ~6 million in the bank.
That would be something!
Edit: it also makes perfect sense, why announce the good news (trial approval) before they can take advantage of the Cantor ATM?
I’m pretty sure the shares purchased under the LPC ELOC agreement did not show up in daily volume on the day LPC purchased them from Anavex. They would not show up until LPC resold those shares into the market.
I believe under the new Cantor ATM the shares will show up on the day that Anavex requests Cantor to sell shares for Anavex directly to investors on Anavex’s behalf.
To my understanding Cantor is an agent who sells Anavex stock to investors for a commission on the sale without taking possession of the stock and trying to flip it for a profit like LPC did.
Quote: The Cantor ATM is available but tapping $10+ million inside of a year to fund clinical trials doesn't seem feasible.
Easy peazy lemon squeezy.
“During the three months ended December 31, 2016, the Company issued to Lincoln Park an aggregate of 4,500,012 shares of common stock under the Purchase Agreement, including 4,472,841 shares of common stock for an aggregate purchase price of $15,128,272 and 27,171 commitment shares. At December 31, 2016, an amount of $33,513,928 in value of its shares remained available under the 2015 Purchase Agreement.
The Cantor agreement removes the $3 price floor limitations and “hard” daily limits on new share issuances.
High volume would be helpful to disguise the dilution.
Quote: The God Doctor has ATMs with LPC and Cantor. Thus, he can continue to finance this scheme and keep up the appearance of progress almost indefinitely. ATM's are one of the easiest ways to make quick money on Wall Street and firms like LPC and Cantor are only too happy to oblige. Of course, it's expensive money and it's hugely dilutive but TGD doesn't care since he has no choice.
Anavex does not have an ATM with LPC. They have an ELOC (Equity Line of Credit) with LPC. That form of capital acquisition can be relatively expensive and more dilutive because of the mechanics involved in how LPC generates a profit from the relationship.
The relationship with Cantor is indeed an ATM and generally speaking only costs Anavex a 3% fee to issue more shares directly into the market on Anavex’s behalf. ~3% commission is actually pretty low cost financing if you ask me. The dilutive effect is dependent on the stock price but if managed correctly as a small percentage of daily volume the dilutive effects can be minimized.
Almost every single form of raising capital,that I’m aware of, has some sort of fee attached to it. Even a partnership would be dilutive from the prospective that portions of potential future income are traded for the current capital to run the trials.
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