ADXS issued an additional 8-K filing on 3/15/19, lowering the exercise price of approximately 1.3M warrants from $1.50 to $0.30, as mandated by the “Most Favored Nation” clause in the Sep 2018 financing transaction that generated these warrants:
The 1.3M warrants affected by the above filing are the ones owned by holders who refused ADXS’ 3/14/19 offer to swap the warrants 1:1 for ordinary shares at no cost (#msg-147531483). (There were 14.2M warrants originally issued, and 12.9M of them were swapped for shares on 3/14/19, leaving 1.3M warrants outstanding.)
So, why would anybody holding these warrants settle for an exercise price of $0.30 when there was an offer on the table to swap the same warrants 1:1 into an ordinary shares at no cost whatsoever? Answer: ADXS’ swap offer came with a selling restriction during the ensuing 15 days, as detailed in the 3/14/19 (one day earlier) 8-K filing (https://www.sec.gov/Archives/edgar/data/1100397/000149315219003298/form8-k.htm ), and the holders of the 1.3M non-swapped warrants evidently prefer to pay an extra $0.30/sh to exercise their warrants than to accept any encumbrance on selling.
The most likely sequence of events (IMO) is as follows:
• ADXS implements a reverse split. (The BoD recently obtained shareholder approval to do this.)
• If the stare price pops on the above data, ADXS immediately sells shares (and possibly warrants) to raise about $40M of cash, resulting in a cash balance of $65M-70M, which is about 1.5 years of burn at the current burn rate of $45M/year (#msg-147471743).
-- Does this posited scenario make the stock a buy? I don’t know. At one extreme, the financing terms could nearly wipe out existing shareholders, while at the other extreme there might be a BPTH-like upward move in the share price.
I own a small position that I plan to hold to see how this plays out.
“The efficient-market hypothesis may be the foremost piece of B.S. ever promulgated in any area of human knowledge!”
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