Replies to post #76881 on Anavex Life Sciences Corp (AVXL)

[XenaLives]

If the pie is bigger the earnings could also be bigger, even with a smaller percentage.

[samk]

that is correct.

[nsomniyak]

There is one other element to this trade off. If they partner there is obvious external validation of the prospective value, which reduces risk.

If they go it alone they may or may not have had partnership offers. We will never know for sure and there is no external validation.

[frrol]

Yes "dilution" is not an absolute determination. Ie, it is not as simple as dilution = shares being issued. Dilution had to do with shareholder value. To avoid finance theory and math and illuminate the point with a spotlight, I'll just give a ridiculously stark example. What would be more "dilutive": (A) issuing one share of stock for $100MM, or (B) signing a license deal that gives you $1 in up front payment and 1% of net revenue.

(A) means you're issuing stock. But it would be clearly less dilutive to shareholder value.

There is no free lunch in economics, which includes finance. You have to weigh relative values and choose. Issuing stock (at whatever given price) has to be weighed against the terms of a licensing deal (potential or actual). The difficulty lies in the fact that licensing deals have huge unknowns. But then you would be sharing those risks. There are finance equations for evaluating and weighing the choices, using probabilities for the unknowns.

[LakeshoreLeo1953]

BAS...

The entire premise is that with NO EARNINGS stream you can't get to FDA without dilution of some sort. Certainly might be drag on current PPS. On the other hand funding or BP participation might secure more interest and as they say

Market price is only what someone else will offer to you for your shares.