I believe the milestone payment doesn't come for awhile, either approval or FDA acceptance of the NDA. Remember the money's limited in the ATM, the higher the price, the fewer the shares they'll use. I certainly don't know, but hope that management is so confident that these funds will come in when the price is dramatically higher.
It's my belief they want this funding to support the Phase III for AEZS-108. There is no doubt that without a partner for AEZS-108 the burn rate goes up dramatically in starting Phase III, they also will have added costs for launching AEZS-130, a smart reason for raising funds now.
"[E]stablishing an ATM for issuance with the news will work to their benefit."
True, but it becomes less necessary. If the CRC trial succeeds, then the company will receive milestone payments larger than the $16M in the ATM.
Multiple myeloma trial will report when--in October? AEZS cannot afford to be locked out of the capital markets for nearly a year.
As for making life easy for market makers, I seriously doubt that is a sufficient motive for AEZS to engage in dilution. It's the job of a market maker to have shares available. They can do that with an ATM, or without an ATM--and if the trial is successful, market makers will stand ready to trade without an ATM for many years to come.
I cannot agree. If the company has a strong belief the trials are succeeding establishing an ATM for issuance with the news will work to their benefit, as far fewer shares will be needed, and at the MM's benefit, as they'll have some of the shares needed to meet institutional demand.
In that an ATM can't be done in an instant, and AEZS couldn't know when the trial would end, they needed to act in advance of its occurrence.
I'm not suggesting that insurance isn't wise, but with the MM trial producing even stronger evidence that Perifosine should be approved, it could provide the necessary insurance, though it could be early next year before we know for certain.
i completely agree, and ving i enjoy your post but don't understand why you would think they haven't sold any. They always start selling immediately and the pps action in the past weeks has made it look obvious. I expect they have sold somewhere in the neighborhood of half.
We're probably one week from when Institutions will buy into KERX and to some degree AEZS, i.e. April 1st. With the start of a new quarter Institutions that can't buy stocks under $5 or even stocks with less than a billion dollar market cap will buy. They will buy in anticipation that by the end of the quarter the stock will reach the threshold level they need to maintain a stock position. If the stock fails to achieve that level during the quarter, they will sell before the end of the quarter and never need to report ever holding the stock.
If an Institution buys a stock on March 30th, it must be reported as one they hold when they report on May 15th, even though they only held it for a fraction of one day in the quarter. If they buy on or after the first day of the quarter they can hold for essentially 90 days, selling on the last day of the quarter and report nothing. If they have a MM cooperating with them they probably can sell the shares to the MM the last day of the quarter and buy them back the first day of the next quarter with only some minor commission payment, but technically they didn't hold the stock over the quarter.
I do believe that April 1st, actually the 2nd as the 1st falls on Sunday, you'll see Institutions buying both stock. I think that when top line data's announced that's positive with the price up, virtually all of AEZS's ATM will be sold to one or a few Institutional buyers.
If AEZS didn't have the ATM, the MM's anticipating good news would be accumulating shares to meet anticipated demand, but they'd also go short themselves to meet demands of some of their best clients. When the MM's go short they're essentially creating new share that no one but they are paid for and they can hold that position indefinitely. The ATM used properly is a wise way the company may have cooperated with the MM's to gain needed funding and not force the MM's into taking a major short position.
Many believe the ATM's already being used and has held the price down. I believe on Tuesday we'll hear the ATM has not been used, we should know after the company speaks as I don't see them avoiding this subject.
If by June 30th AEZS's price has achieved $5 or more, I believe you'll see Institutional ownership rise to somewhere between 30% and 60%, but you'll not see it until August 15th when Institutions must report. As for KERX, they may have been bought out by then, or may have taken on a major partner for either just Perifosine, or all their products. KERX will certainly have much higher Institutional ownership if it is still in existence as KERX.
excellent write up skit except the part about the atm not being used yet. i would bet that it has been used and i'm hoping they are at least halfway finished. They are probably raising money and buying kerx with it, lol...
Gary ... great comments as always.
1. If the ATM has not been issued yet, I would then be concerned as to why the PPS has been such a laggard behind KERX. KERX has accelerated the move, while we have languised. Yes, KERX has a higher short position. However, AEZS offers a bigger potential IMO, with the rights to the rest of the world (with Europe still indeclared).
2. Agree with your comments on Institutions. I believe they HAVE already started positions within the last 2 weeks. Thursday and Friday of last week saw a nice stream of millions into our stock. This is not the momos on this message board pumping this level of cash into the stock.
3. If I am Institution wanting to take ATM stock, why wait to take ATM shares at higher prices, when you can buy now before a move? I do not believe Institutions have not drawn conclusions on the success of Perifosine by this point. Yakult found it compeling enough to move forward.
4. If KERX is bought out, AEZS will drive a higher premium on the PPS due to holding rest of world rights.