Good Saturday, all! I’m back at my home computer, full of numbers for the past week, which I….really don’t want to spend a lot of time on. Let’s face it, I’m a bit of a fair weather fan. Why dwell on a disappointing week in the stock price? It’s not required that I do, and besides, I DON’T GET PAID, so I can do what I want.
So, what we’ll do instead is start with a song to rally the sales force. This song, though it’s about Acton, has always struck me as a call to acTION. This company, with its unique and innovative medicine, will live or die based on the amount of the product it sells. We’ll get a report this week, which will be more definitive than the weekly numbers some of our faithful supply here (for which we are always grateful). Anyway, back to the song. It’s by my man Pete, and it’s a wonderfully British video. Enjoy, Sir F!
OK, I’ll give some numbers. In the first week after getting a completely favorable nod from CHMP, AVNR lost 19 cents to close at $3.10, which is 5.77%. YTD is actually still respectable with a 18.5% increase. Last May 3, the stock closed at $2.93. Since then the price has actually gained 5.8%. Better than a CD, but let’s face it—that’s disappointing.
So, what’s up with the stock price? A week ago Friday, we got the thumbs up from CHMP. The stock price went crazy in the morning, only to fade all day and limp home with a gain of about 9 cents. This week, the NASDAQ outperformed AVNR every day of the week.
Now, some around here will say this is indicative of the small market for the drug, the “slow” ramp-up of sales, generic challenges, etc. But I say that a stock’s price is not necessarily indicative of the value of the company.
Let’s pick an obscure example: AAPL. Right now, it’s at $449.98. Is that a fair value? Was it undervalued two weeks ago on April 19, when the stock price hit a low of $385.10? Or was it overpriced last Sept 21, about 8 months ago, when a share sold for $705.07?
My point: at any given moment, a stock’s price can be seriously out of whack with the company’s value. Right now, with EMA broad label approval clearly in sight and the company steadily progressing toward break-even, IMO, this stock is under-valued.
It’s going to happen. The 20 million shorts will have to cover. It’s just a matter of what the catalyst is going to be. Mike may be right—it may be when the generic challenges are found to be without merit. Or it may be when a partnership is announced for the EU. The bottom line is it’s coming, regardless of how the stock price is a daily reminder for longs that we’re not as smart as we thought.
I turn to the Boys for our theme song. This clip is so dated! Great song, and I like the theme for where Avanir is right now. But the video is so cheesy. They not only didn’t plug in; they don’t even have microphones in front of them. And John can’t help but have fun with the whole farce. Which isn’t really a bad attitude, in general.
Sarge the 20 plus million shorts are betting its going to ZERO,,,or something will happen for people to panic and dump in the 1's...EU approval friday we had 12 million shares trade and we went up 9 cents.......Short shares were issued for the market days before up to 800k for them to play with if the EU was granted which it was,Generic need to go bye bye and then its on!
I think a European partnership has to be expected by all and is not such a momentous event that it would trigger a lot of short covering, and not a short squeeze.
If I were short I would not want to be short ahead of the judge's decision in January on the patent infringement lawsuit but the shorts may be thinking the PBA market is small and an AVNR win just means the present paltry sales will most likely just continue to increase very slowly from the low level they will be at as of then (like $110 million in net sales). So they may continue to hold their short position even throughout the judge's deliberations and decision. I don't know.
Your point about stock price fluctuations is true, but the question still remains as to what is a fair price.
I see on 4/8/13 for example, AVNR was at $2.64. Was that the fair price or is today's price of $3.10 fair, or is the fair price the intraday high of $3.86 seen the day of the CHMP recommendation for a broad label?
I think if off-label pain use is not coming, the present market cap of $425 million for a company likely to have only $110 million in net revenues January, 2014 with $110 million in total operating expenses then, and with a patent infringement case to be decided then is a fair price.
A good Saturday to you, sir.
Great summary and thank you sarge for compiling .
Of all the posters to mention I wish you hadn't mentioned Mikie avnr rocks. His Victorian homophobic Neanderthal opinions have cluttered this board all week . I'm surprised he wasn't banned form Yahoo msg boards. I guess enough people didn't flag him.