I was not expecting a much higher rally on EU news. This stock has been bogged down by a long dull period of being dead money and some people (including some employees with options) tend to jump on good news and take their profit. Analyst upgrade doesn't seem to help that much as most of the tutes who have been loaded up are loaded up. The only thing that can change this paradigm is strong sales and increased market penetration.
The EU approval is great but how will it translate to dollars. Avanir basically has to partner -- no way in the world they can go in alone in all these countries and using distributors can be an nightmare. How much is BP willing to pay for partnership is the next big question. Maybe by now Keith is convinced to sell the company instead of trying to make the shorts lose their shorts which simply did not happen as he told us it would. A BP should pick up Avanir for 100% premium - it's chump change for them and Avanir has something good to offer.
I'm guessing a $5/share buyout offer would be a reasonable offer. It would be a 52% premium to the present price of $3.29 and would value the company at about $688 million.
Institutions usually follow management recommendations to accept a buyout offer.
So it would be up to
Avanir management and the Avanir Board of Directors.
Question is, does any Big Pharma want to pay $688 million? This is 9.2 times present net sales, but I think it could be 3.1 times peak PBA sales of perhaps $220 million.
And if they can realize peak off-label (and eventually on-label) pain sales of an additional $875 million, perhaps around 2018, it would be a great buy for a Big Pharma now at $688 million.
The "fun" has always been promised "just around the corner". With the recent upgrades, I'm a little worried there will be yet another capital raise, so they have sufficient funds to get us "right around the corner". I think the AVNR C-suite has the wrong philosophy. They should under-promise and over deliver rather than the other way around. It's very frustrating!
Hoping they sell rather than partner. Hoping Keith, executives and BodD have enough stock that they feel taking a reasonable lesser one-in-hand BO ASAP over the headaches of production, marketing, sales in EU/beyond and dealing with everything else associated with upside that may or may not happen 3-5 years out.
No clue what their personal wealth is now, just hoping they've been working behind the scenes for the past two years to set AVNR up for a sale and that a BO is their #1 - #10 exit strategy! And that it has a realistic chance 2013. (Or no later than this time 2014....ugggg)