The market would have dropped the stock no matter who financed the deal. Anytime there is a possibility of dilution, some people will panic and sell their shares and it provides an opportunity for others to take short positions.
Dr. Missling made it clear that there is currently 4 years of cash runway available. He's planning for the future to ensure he always has access to cash. What's so bad about that? The deal itself seems favorable and on par with Cantor Fitzgerald's.
Let me ask the board this question: if a blue chip investment bank offered the same $150mm financing, but at worse terms than LPC, which would you prefer Dr. Missling choose? Money is money, and fortunately this money isn't even needed right now. But Dr. Missling is in a far better position to negotiate a deal now with $140mm cash in the bank than he would be when the cash starts to dry up. If anyone wants to know how toxic death spiral financing works, it usually begins with a company that is strapped for cash making disadvantageous, highly-dilutive deals with vulture firms out of necessity. I applaud Dr. Missling for not letting Anavex get to that point.
Maybe the naysayers are correct. The drug is a bust, the FDA is corrupt, whatever the case may be, it's important to always leave some room for doubt. And if one is so easily talked into all the reasons to walk away now, Anavex probably is too high-risk or that person has too much invested. As a purely speculative, high-risk/high-reward gamble, however, I don't know of too many opportunities that are better than what we're facing today.
Much of the risk has evaporated over the last few years. Those attacking the science are slowly changing their tune to attack Dr. Missling because he's an easier target -- at some point the FDA will decide whether the science is valid but CEO criticisms are subjective and can last forever.
What happens if we reach March 1 and nothing happens? Nothing happens. What's so special about March 1 and who cares if the wolves begin to howl? Anavex doesn't have any debt due on March 1, it's just another day.
