After thinking more about the amendment to the agreement between Anavex and LPC, both parties are thinking long term. Anavex needs to raise capital if its drug development outlast its cash position, which is presently enough to last for one year assuming its current clinical trial situation is all that Anavex has planned for now. Anavex may also have something else in mind in making this deal. Either way, Anavex will need more capital, and LPC is willing to risk capital, just like some of us on this board, because it thinks there will be a payoff that is worth the risk.
Either way, it's a good deal for Anavex.
If the trials are positive, Anavex may not need to sell much, if any, stock to LPC. Anavex could sell stock to others at a higher price, and/or Anavex may find some other favorable option such as a partnership.
If Anavex's current trials are not so positive (as some here think), Anavex can sell stock to LPC, use the capital to seek to salvage what it can from current drug trials, and conduct new trials for AVXL 2-73 and for its other drugs down the road.
Any way you look at it, Anavex is planning to remain in business, and will need more capital beyond its current one year capital position. Additionally, LPC is willing to risk a large amount of its capital because it thinks the payoff may be huge enough to take that risk.
Another way of stating this is that:
(1) Anavex is willing to give up some ownership if its future capital needs for drug development or its future situation demands it, and
(2) LPC thinks the award is worth the risk of providing a substantial amount of that future capital to Anavex.
Therefore, on balance, this agreement is positive for Anavex and its shareholders.
