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Friday, December 3, 2010

Avanir's Proposed Offering

From The New VFC's Stock House, Dated Wednesday, November 17th.

AVNR: Avanir Pharmaceuticals announced on Monday a proposed public offering of common stock, just weeks after the FDA granted approval for Nuedexta, a treatment for pseudobulbar affect (PBA). PBA is a condition characterized by spontaneous and uncontrollable laughing and/or crying and shares of AVNR doubled on news that Nuedexta had been approved.

The last hour of trading before the after-hours approval news was released however, could be described as shady at best, even with an ensuing double in the works. On high volume during that last hour on October 29th, the AVNR share price was ‘bear-raided’ down to a low of $1.31 before somewhat recovering, which left the door open for the double that would follow on Monday’s open.

The announcing of a stock offering should come as no surprise to investors who have seen AVNR’s share price decline over the past couple of weeks as profit takers jumped ship and expectations of a cash-raising event rained on the victory parade.

However, the long term potential of Avanir is in no way diminished, this is purely a case of a company needing cash to put the growth plan in motion. Expecting a sales force of roughly 75 personnel, according to recent reporting, and with the intent of ‘going it alone’ in the United States, the cash raised from this offering should put Avanir in a position of success before the commercial launch of Nuedexta during the first half of 2011.

Partners may be taken on board for an overseas launch, but I believe that the announcement of this offering indicates that the company will ‘go it alone’ in the US, otherwise I think we would have seen a partner pay out a nice up-front chunk of money by now.

With the recent FDA approval and commercial launch set for early next year, AVNR is set up as a nice long term growth stock, in my opinion, and there should be ample time to pick up a few shares at the current prices before this one meets it’s potential later on down the road.

Disclosure: No position.

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