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Post by JHam on Apr 20, 2020 14:47:08 GMT
I spent the weekend looking into this one and just opened a position. A vulch stock was ABR's way of describing a stock that has been beaten down either by recent financing or a misunderstanding by the market, and the vultures are coming in for the easy pickins. ---------- There is a lot to unpack here, but here is a summary. - FDA just approved their pain manangement IV drug, Anjeso - $6B market - It is a non-opiod drug which has favorable side effects (less bleeding) that current standard of care (non-opiod) - The oral form is already on the market (not BXRX), but doctors have wanted an IV form for those with GI issues or those who are not in a state to be able to swallow a pill - The other two non-opiod IV pain management drugs, Ofirmev and Exparel, each owned by tiny companies, saw sales double each year for a few years until both companies were bought out for $1.3B and $1.8B respectively. - There are several benefits of Anjeso over the two above-mentioned drugs, such as, has faster onsetis longer lastingmore effective relief for moderate to severe painhas fewer complications- BXRX was split off from a mother company called Recra Pharma last November - The CEO and most of the management left Recra for BXRX - BXRX was trading at $10 ($85M) a share just a few weeks ago - They raised $25M in a massive raise last month that crushed shareholders. Along with 15M warrants at $4.59 and $3.25 - In total, fully diluted the shares would be 35M and the total amount they'd raise would be $85 before warrants run out in 5 years - The dilution sucked big time and there is lots of anger about how management handled it. They needed cash to ramp up for commercialization of Anjeso and they waited too long to dip into their ATM (with coronavirus killing the market). So they did what they had to do - Tons of institutional ownership averaged at twice the current share price - Current share price is $2.38 ($41M) - Peak sales for Anjeso is projected at $355M by 2025 (18% of the market) - BXRX also has other potential blockbuster drugs in the pipeline --------- All signs point to this one being bought out at some point in the near future, imo. It is a proven drug, this is just the IV form, which clinicians have expressed a dire need for. They cite too many complictions and side effects from opiod drugs like morphine. It bodes well that given the current state of things that they had no problem fully subscribing the offering. Insiders have also been buying shares on the open market, including, I sh*t you not, Winston Churchill In short, all of the dirty laundry is out of the way imo. They have plenty of cash, an FDA approved potentially blockbuster drug that is being distributed as we speak, good institutional and insider positions average way above the current pps, and warrants don't come into play until $3.25. Even though the warrants will add more dilution in the future, the upside is so huge here, that I am not worried about it. Especially at these prices. Good SA article (pre-offering so read the comments to get that reaction): seekingalpha.com/article/4326253-tiny-underfollowed-baudax-bio-way-too-cheap-after-receiving-fda-drug-approvalFirst and only corporate presentation (they've yet to have a conference call): d1io3yog0oux5.cloudfront.net/_db8b7dc37d5bcee02f8d777812547c41/baudaxbio/db/227/1313/pdf/Baudax+Bio+Corporate+Overview_Post+Approval+2020%282%29.pdfAnjeso distribution PR: finance.yahoo.com/news/baudax-bio-announces-u-availability-120010729.html
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Post by JHam on Apr 20, 2020 14:53:29 GMT
Even though I've called this a vulch stock, this is definitely a long term play for me. I have no problem just holding and waiting. Looking forward to the first earnings call when they can report the first batch of sales.
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Post by JHam on Apr 20, 2020 15:16:48 GMT
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Post by JHam on Apr 22, 2020 15:34:15 GMT
Should have bought more of this, as usual. Up 14% today so far. I have a solid position, but considering everything that I’ve mentioned in the previous posts, I felt comfortable grabbing some more cheap shares. Even if it doesn’t drop back down I may buy more anyway.
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Post by Yelk on Apr 23, 2020 3:00:08 GMT
Okay JHam, you got me very interested, sad I didn't see this a few days ago. Here is extra info for you and anyone else who is interested. I dug deep.
Also before I start, I've been on this forum for like half a decade and can I note that my quote in profile is by Winston Churchill the inside buyer and look at what the quote is. LOL. Im taking it as a sign from upstairs that this is my ticket.
I am interested in opening a position (and probably will if stays around $2.50), however my initial thought was large position for a blockbuster 1000% over 3-5 years (potentially) which is possible but after really carefully reading through all the risks I've brought my head back around to reality. I don't think considerable upside is out of the question IF all goes well, but given the economy (and factors I'll go over) and 7.7M warrants at $3.25 for 13 months I don't see this stock getting above that point while it starts in launch so the risk is tying up a ton of capital for long time I wanted to invest. I don't see stock price going over $3.50 to hold until summer/fall 2021 and then we might start seeing the attack on the next set of warrants if revenue starts to take off. I love the Seeking Alpha article and I think it has many accurate points, but I have a hard time rolling with it after reading the comments from Feb-April. The author calls long and bull at $9 then every $2 down says buying more and short squeeze any day, its coming now... At $2 he is still buying and laughing with smiley faces. Hedge Fund manager, just doesn't feel right to me to be so confident in a stock, but hey detached emotions can be good right? Haha, I just don't think he has more than a $1,000 in it to be that calm. Must have averaged down 5 times.
Credibility seems to be an issue here with the press release of the $20M non-dillutive debt and not raising ATM when they could then terrible timing in the offering. Worse is the lack of communication and is some slides there seems to be a lack of information both financially and data wise. They smashed shareholders. All that being said - I'm giving management the benefit of the doubt/green light and still willing to invest because of the CEO's track record of other companies and why she chose to move to BXRX. Everyone makes mistakes and they have given great shareholder value in other companies. Their mistake may be our opportunity to enter this stock, shrug.
Cash and liabilities - The company had some cash on hand, like you said raised $23M net and and have warrants to assist down the road. The plus side is now there is no $20M interest debt to worry about. One thing I am worried about is they have $188 million of obligations- no small matter for a $40 million market cap company (confirm?). Of which $130 million relates to the purchase of the Anjeso rights. Discuss JHam? These may not be payable if the company executes milestones, so some people don't include in analysis, but seems a potential risk. Also, Recro had to pay some contingent consideration for Anjeso, what do we know about that? Either way now the company I believe is financially set so we don't have to worry about that for the next 1-5 years.
Catalysts - The company now has an approved drug to launch. Take a look at the chart for a similar company/drug that was written about in seeking alpha. This is why I got excited about this stock in the first place. Revenue updates and everything else, along with market recovery should help. This is also all without the companies pipeline. Insider buying will help and like JHam said, buying this at half price institutional ownership/many funds. I only see good things from the company, as long as this actually is needed and they get it out as they promise, obviously its hit or miss, if they do great, if not company is a dud, but seems good risk/reward at these levels.
Competition - Not much out there at first glance aside from Anjeso patent risk we can't confirm how bulletproof it is, I like how this goes against opioid drugs and think it is needed. That being said here are some comments (from numerous sources) I found: Ofirmev I believe goes off patent late 2020 or early 2021. The $80-100 Anjeso price looks reasonable relative to today's Ofirmev pricing. But with generic Ofirmev right around the corner, who knows how much price premium you can secure for the once daily dosing. Some of the Anjeso patents go off in 2-3 years' time. There is only one, the reduction in flake-like aggregation that lasts all the way to 2030. Who really knows if that's a blocking patent? It seems to me there's sizeable risk someone figures out a way to make injectable meloxicam that doesn't infringe that patent. Even if it is a blocking patent, there will be a challenge to the patent from someone - especially since the active ingredient itself is not patentable. In Ofirmev's case Exela challenged the patent but failed. But if you read the analysis (www.finnegan.com/...) of the case, it seems the details of the patent wording really matter - and there's a good chance in litigation a gap is found. Again this would decimate your FCF projections. Even if you win the inevitable patent challenge from a generic maker, it can make you unacquirable for a period of time. In Ofirmev's case Malinkrodt only acquired once there was an initial ruling of the Exela case. But to be clear this delay forces you to run up the cost escalation ramp as you try to prove revenue growth. Ofirmev raised $180m in equity post FDA approval. Their ramp looks more aggressive than what Anjeso is planning (180 reps in first twelve months vs. 50), but still it's not obvious to me your projections fully capture that. One thing I'm sure of is they are competitors assuming IV Tramadol is approved and not re-scheduled. No idea what Baudax management is talking about... they are looking like clowns more and more every day hence why I haven't pushed this position up. The biggest problem with the pain management space is it keeps getting more crowded, especially once Heron's product gets in the mix.
Conclusion - I think there is a chance, that this could be a phenomenal ride for the next 3+ years but there ARE risks and its not as bulletproof as I initially thought especially with the obligations, warrants, economy, pandemic, sentiment etc. But I think this is a fantastic find by JHam and I see this as extremely low risk to downside for a 50-100% year return with the chance of a very bright future. I see no reason not to be long and I probably will join the story, but just not the size of position yet! Will be a fun one to watch.
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Post by JHam on Apr 23, 2020 11:34:10 GMT
Okay JHam, you got me very interested, sad I didn't see this a few days ago. Here is extra info for you and anyone else who is interested. I dug deep.
Also before I start, I've been on this forum for like half a decade and can I note that my quote in profile is by Winston Churchill the inside buyer and look at what the quote is. LOL. Im taking it as a sign from upstairs that this is my ticket.
I am interested in opening a position (and probably will if stays around $2.50), however my initial thought was large position for a blockbuster 1000% over 3-5 years (potentially) which is possible but after really carefully reading through all the risks I've brought my head back around to reality. I don't think considerable upside is out of the question IF all goes well, but given the economy (and factors I'll go over) and 7.7M warrants at $3.25 for 13 months I don't see this stock getting above that point while it starts in launch so the risk is tying up a ton of capital for long time I wanted to invest. I don't see stock price going over $3.50 to hold until summer/fall 2021 and then we might start seeing the attack on the next set of warrants if revenue starts to take off. I love the Seeking Alpha article and I think it has many accurate points, but I have a hard time rolling with it after reading the comments from Feb-April. The author calls long and bull at $9 then every $2 down says buying more and short squeeze any day, its coming now... At $2 he is still buying and laughing with smiley faces. Hedge Fund manager, just doesn't feel right to me to be so confident in a stock, but hey detached emotions can be good right? Haha, I just don't think he has more than a $1,000 in it to be that calm. Must have averaged down 5 times.
Credibility seems to be an issue here with the press release of the $20M non-dillutive debt and not raising ATM when they could then terrible timing in the offering. Worse is the lack of communication and is some slides there seems to be a lack of information both financially and data wise. They smashed shareholders. All that being said - I'm giving management the benefit of the doubt/green light and still willing to invest because of the CEO's track record of other companies and why she chose to move to BXRX. Everyone makes mistakes and they have given great shareholder value in other companies. Their mistake may be our opportunity to enter this stock, shrug.
Cash and liabilities - The company had some cash on hand, like you said raised $23M net and and have warrants to assist down the road. The plus side is now there is no $20M interest debt to worry about. One thing I am worried about is they have $188 million of obligations- no small matter for a $40 million market cap company (confirm?). Of which $130 million relates to the purchase of the Anjeso rights. Discuss JHam? These may not be payable if the company executes milestones, so some people don't include in analysis, but seems a potential risk. Also, Recro had to pay some contingent consideration for Anjeso, what do we know about that? Either way now the company I believe is financially set so we don't have to worry about that for the next 1-5 years.
Catalysts - The company now has an approved drug to launch. Take a look at the chart for a similar company/drug that was written about in seeking alpha. This is why I got excited about this stock in the first place. Revenue updates and everything else, along with market recovery should help. This is also all without the companies pipeline. Insider buying will help and like JHam said, buying this at half price institutional ownership/many funds. I only see good things from the company, as long as this actually is needed and they get it out as they promise, obviously its hit or miss, if they do great, if not company is a dud, but seems good risk/reward at these levels.
Competition - Not much out there at first glance aside from Anjeso patent risk we can't confirm how bulletproof it is, I like how this goes against opioid drugs and think it is needed. That being said here are some comments (from numerous sources) I found: Ofirmev I believe goes off patent late 2020 or early 2021. The $80-100 Anjeso price looks reasonable relative to today's Ofirmev pricing. But with generic Ofirmev right around the corner, who knows how much price premium you can secure for the once daily dosing. Some of the Anjeso patents go off in 2-3 years' time. There is only one, the reduction in flake-like aggregation that lasts all the way to 2030. Who really knows if that's a blocking patent? It seems to me there's sizeable risk someone figures out a way to make injectable meloxicam that doesn't infringe that patent. Even if it is a blocking patent, there will be a challenge to the patent from someone - especially since the active ingredient itself is not patentable. In Ofirmev's case Exela challenged the patent but failed. But if you read the analysis (www.finnegan.com/...) of the case, it seems the details of the patent wording really matter - and there's a good chance in litigation a gap is found. Again this would decimate your FCF projections. Even if you win the inevitable patent challenge from a generic maker, it can make you unacquirable for a period of time. In Ofirmev's case Malinkrodt only acquired once there was an initial ruling of the Exela case. But to be clear this delay forces you to run up the cost escalation ramp as you try to prove revenue growth. Ofirmev raised $180m in equity post FDA approval. Their ramp looks more aggressive than what Anjeso is planning (180 reps in first twelve months vs. 50), but still it's not obvious to me your projections fully capture that. One thing I'm sure of is they are competitors assuming IV Tramadol is approved and not re-scheduled. No idea what Baudax management is talking about... they are looking like clowns more and more every day hence why I haven't pushed this position up. The biggest problem with the pain management space is it keeps getting more crowded, especially once Heron's product gets in the mix.
Conclusion - I think there is a chance, that this could be a phenomenal ride for the next 3+ years but there ARE risks and its not as bulletproof as I initially thought especially with the obligations, warrants, economy, pandemic, sentiment etc. But I think this is a fantastic find by JHam and I see this as extremely low risk to downside for a 50-100% year return with the chance of a very bright future. I see no reason not to be long and I probably will join the story, but just not the size of position yet! Will be a fun one to watch.
Yelk, thanks for the post. There’s a lot to respond to there, some that I agree with and some that I definitely don’t. I’ll respond later. In the meantime, news: finance.yahoo.com/news/baudax-bio-announces-u-availability-120010729.html“The data virtually published by ASRA this year demonstrate that ANJESO is not only efficacious and well tolerated when administered preoperatively to patients prior to total knee arthroplasty (TKA), but it is also associated with a decreased need for opioids following surgery,” said Stewart McCallum, M.D., F.A.C.S., Chief Medical Officer of Baudax Bio. “From a health economic perspective, the study also demonstrated that use of ANJESO is associated with an average of approximately $2,300 in cost savings per patient, lower length of stay (LOS) and fewer hospital readmissions and emergency room (ER) visits during recovery. ANJESO is now available for ordering and delivery to U.S. customers, and we are actively preparing for the full commercial launch by June 2020.”
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Post by Yelk on Apr 23, 2020 13:05:12 GMT
For sure, would love to hear thoughts on disagreements too, also want to say particularly area under competition was just words I found of others and not my opinion.
Will be interesting to see how the commercial launch rolls out. Do you think COVID will affect it much? The need is still there.
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Post by Yelk on Apr 23, 2020 13:43:06 GMT
Joined the story here at $2.69 shortly after open. Its a size I'm very comfortable with being small and risking at least half but enough that if it goes I'll be happy. I've set my expectations low for the next few months and wanted it to be a size if it dribbles back down a bit won't shake me out.
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Post by Yelk on Apr 23, 2020 15:16:57 GMT
It seems like we might dribble between $2.20 and $3.20 for a bit, I would imagine the ceiling on any good news PR or change in buying sentiment would be that low $3's area because of the warrants? Warrants are only 20% above my entry purchase, I guess my only logic in the buy today was it gives me that room for error rather than chasing it above $3. I'm still curious your thoughts on that, I feel like people who want to use their equity to always be making money would wait until $3.25 warrants have been pushed out if that is the limited upside. Its the only thing I can think of why the stock has sat and to be honest my only concern at these levels. A stock that has as many outstanding warrants right above market value as outstanding shares isn't much logic in loading the boat. Unless I'm missing something. I still see the value at starting a position at these levels, but not at really getting any size despite the appeal.
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Post by JHam on Apr 23, 2020 16:36:52 GMT
Okay JHam, you got me very interested, sad I didn't see this a few days ago. Here is extra info for you and anyone else who is interested. I dug deep.
Also before I start, I've been on this forum for like half a decade and can I note that my quote in profile is by Winston Churchill the inside buyer and look at what the quote is. LOL. Im taking it as a sign from upstairs that this is my ticket.
I am interested in opening a position (and probably will if stays around $2.50), however my initial thought was large position for a blockbuster 1000% over 3-5 years (potentially) which is possible but after really carefully reading through all the risks I've brought my head back around to reality. I don't think considerable upside is out of the question IF all goes well, but given the economy (and factors I'll go over) and 7.7M warrants at $3.25 for 13 months I don't see this stock getting above that point while it starts in launch so the risk is tying up a ton of capital for long time I wanted to invest. I don't see stock price going over $3.50 to hold until summer/fall 2021 and then we might start seeing the attack on the next set of warrants if revenue starts to take off. I love the Seeking Alpha article and I think it has many accurate points, but I have a hard time rolling with it after reading the comments from Feb-April. The author calls long and bull at $9 then every $2 down says buying more and short squeeze any day, its coming now... At $2 he is still buying and laughing with smiley faces. Hedge Fund manager, just doesn't feel right to me to be so confident in a stock, but hey detached emotions can be good right? Haha, I just don't think he has more than a $1,000 in it to be that calm. Must have averaged down 5 times.
Credibility seems to be an issue here with the press release of the $20M non-dillutive debt and not raising ATM when they could then terrible timing in the offering. Worse is the lack of communication and is some slides there seems to be a lack of information both financially and data wise. They smashed shareholders. All that being said - I'm giving management the benefit of the doubt/green light and still willing to invest because of the CEO's track record of other companies and why she chose to move to BXRX. Everyone makes mistakes and they have given great shareholder value in other companies. Their mistake may be our opportunity to enter this stock, shrug.
Cash and liabilities - The company had some cash on hand, like you said raised $23M net and and have warrants to assist down the road. The plus side is now there is no $20M interest debt to worry about. One thing I am worried about is they have $188 million of obligations- no small matter for a $40 million market cap company (confirm?). Of which $130 million relates to the purchase of the Anjeso rights. Discuss JHam? These may not be payable if the company executes milestones, so some people don't include in analysis, but seems a potential risk. Also, Recro had to pay some contingent consideration for Anjeso, what do we know about that? Either way now the company I believe is financially set so we don't have to worry about that for the next 1-5 years.
Catalysts - The company now has an approved drug to launch. Take a look at the chart for a similar company/drug that was written about in seeking alpha. This is why I got excited about this stock in the first place. Revenue updates and everything else, along with market recovery should help. This is also all without the companies pipeline. Insider buying will help and like JHam said, buying this at half price institutional ownership/many funds. I only see good things from the company, as long as this actually is needed and they get it out as they promise, obviously its hit or miss, if they do great, if not company is a dud, but seems good risk/reward at these levels.
Competition - Not much out there at first glance aside from Anjeso patent risk we can't confirm how bulletproof it is, I like how this goes against opioid drugs and think it is needed. That being said here are some comments (from numerous sources) I found: Ofirmev I believe goes off patent late 2020 or early 2021. The $80-100 Anjeso price looks reasonable relative to today's Ofirmev pricing. But with generic Ofirmev right around the corner, who knows how much price premium you can secure for the once daily dosing. Some of the Anjeso patents go off in 2-3 years' time. There is only one, the reduction in flake-like aggregation that lasts all the way to 2030. Who really knows if that's a blocking patent? It seems to me there's sizeable risk someone figures out a way to make injectable meloxicam that doesn't infringe that patent. Even if it is a blocking patent, there will be a challenge to the patent from someone - especially since the active ingredient itself is not patentable. In Ofirmev's case Exela challenged the patent but failed. But if you read the analysis (www.finnegan.com/...) of the case, it seems the details of the patent wording really matter - and there's a good chance in litigation a gap is found. Again this would decimate your FCF projections. Even if you win the inevitable patent challenge from a generic maker, it can make you unacquirable for a period of time. In Ofirmev's case Malinkrodt only acquired once there was an initial ruling of the Exela case. But to be clear this delay forces you to run up the cost escalation ramp as you try to prove revenue growth. Ofirmev raised $180m in equity post FDA approval. Their ramp looks more aggressive than what Anjeso is planning (180 reps in first twelve months vs. 50), but still it's not obvious to me your projections fully capture that. One thing I'm sure of is they are competitors assuming IV Tramadol is approved and not re-scheduled. No idea what Baudax management is talking about... they are looking like clowns more and more every day hence why I haven't pushed this position up. The biggest problem with the pain management space is it keeps getting more crowded, especially once Heron's product gets in the mix.
Conclusion - I think there is a chance, that this could be a phenomenal ride for the next 3+ years but there ARE risks and its not as bulletproof as I initially thought especially with the obligations, warrants, economy, pandemic, sentiment etc. But I think this is a fantastic find by JHam and I see this as extremely low risk to downside for a 50-100% year return with the chance of a very bright future. I see no reason not to be long and I probably will join the story, but just not the size of position yet! Will be a fun one to watch.
If I were buying above the warrant exercise price, then maybe I would be a little more concerned. I own shares 39% below warrants and 95% below the pricing of the offering, s right there I feel that my risk, and anyone else who buys now‘s risk, is mitigated. The company is currently trading at $2.65 a share, or $46M market cap. I have already factored into my thesis the dilution at $3.25 and $4.59. Fully diluted we’re looking at 32M shares roughly (going off of the top of my head). Sure, that will affect the value of my shares. However, it’s a drop isn the bucket when you consider the potential value of Anjeso. BXRX was spun off for one reason, acquisition. They looked at the competition, Ofirmev and Exparel, knew they had the same potential and purposefully restructured to make it easy for any bidders when the time comes. Would I be a buyer at $100M? No. $40M is much less risky. And again, is 95% lower than what the investors just a paid. Keep in mind, Exparel trades at a 4x multiple of revenue. If Anjeso has peak sales of only $50M and only trades at 2x revenue, fully diluted, it would still be worth more than it is now. If peak sales meet the $350M revenue target and it trades at 4x multiples like its competitors, fully diluted, then we’re looking at about a $40 share price. Anywhere in between is still an incredible return on investment. As I explained before, the last round of dilution crushed shareholders at the time and was poorly managed. Again, I think a lot of that had to do more with corona than anything. After getting FDA approval, management panicked about the remaining line from their ATM, and likely also panicked about being able to raise money from the market, and did what they had to do. I really think it’s as simple as that. Regarding your comment about the $188M in obligations, I read the same comment section at SA. I agree with the author of the articles’ reply, which was the following: “Total liabilities were $71 million as of the end of the year. Of which $63 million are milestone payments that get paid if and when milestone targets are reached, which only happens if they are successful. Otherwise they don't have to pay it. If the drug is successful, this effectively reduces the gross margin, and I used the reduced gross margin, so it's already included in the analysis.” He’s right. Again, if the drug does what we hope, then it is a small prove to pay. As for credibility. The amount of institutional ownership leads me to believe that they feel there is something good happening here. The SA author is good in my opinion, and I don’t find anything unusual at all about him averaging down. I’ve down the same before too. Sometimes you laugh to keep from crying. It doesn’t change the thesis for investing in this company. Ultimately, I think it will end up somewhere in the middle. I’d gladly take a buyout at $12 a share. Heck, I’d take $6. At these levels, where cash is no longer an issue, I don’t mind forgetting about this one and coming back in a year or so and seeing where we’re at.
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Post by Yelk on Apr 23, 2020 19:29:46 GMT
Cut out my quote cause its so long. Look above to read. If I were buying above the warrant exercise price, then maybe I would be a little more concerned. I own shares 39% below warrants and 95% below the pricing of the offering, s right there I feel that my risk, and anyone else who buys now‘s risk, is mitigated. The company is currently trading at $2.65 a share, or $46M market cap. I have already factored into my thesis the dilution at $3.25 and $4.59. Fully diluted we’re looking at 32M shares roughly (going off of the top of my head). Sure, that will affect the value of my shares. However, it’s a drop isn the bucket when you consider the potential value of Anjeso. BXRX was spun off for one reason, acquisition. They looked at the competition, Ofirmev and Exparel, knew they had the same potential and purposefully restructured to make it easy for any bidders when the time comes. Would I be a buyer at $100M? No. $40M is much less risky. And again, is 95% lower than what the investors just a paid. Keep in mind, Exparel trades at a 4x multiple of revenue. If Anjeso has peak sales of only $50M and only trades at 2x revenue, fully diluted, it would still be worth more than it is now. If peak sales meet the $350M revenue target and it trades at 4x multiples like its competitors, fully diluted, then we’re looking at about a $40 share price. Anywhere in between is still an incredible return on investment. As I explained before, the last round of dilution crushed shareholders at the time and was poorly managed. Again, I think a lot of that had to do more with corona than anything. After getting FDA approval, management panicked about the remaining line from their ATM, and likely also panicked about being able to raise money from the market, and did what they had to do. I really think it’s as simple as that. Regarding your comment about the $188M in obligations, I read the same comment section at SA. I agree with the author of the articles’ reply, which was the following: “Total liabilities were $71 million as of the end of the year. Of which $63 million are milestone payments that get paid if and when milestone targets are reached, which only happens if they are successful. Otherwise they don't have to pay it. If the drug is successful, this effectively reduces the gross margin, and I used the reduced gross margin, so it's already included in the analysis.” He’s right. Again, if the drug does what we hope, then it is a small prove to pay. As for credibility. The amount of institutional ownership leads me to believe that they feel there is something good happening here. The SA author is good in my opinion, and I don’t find anything unusual at all about him averaging down. I’ve down the same before too. Sometimes you laugh to keep from crying. It doesn’t change the thesis for investing in this company. Ultimately, I think it will end up somewhere in the middle. I’d gladly take a buyout at $12 a share. Heck, I’d take $6. At these levels, where cash is no longer an issue, I don’t mind forgetting about this one and coming back in a year or so and seeing where we’re at. Thanks so much for the reply. I 100% agree everything you said. One thing though, some comments of people who have long term personal relationships (if you can call it that) with the CEO suggested she would not want to sell the company and that this would be her baby. Changing companies would also signal some longer term direction. Of course like you said it doesn't matter as upside is upside, but still interesting. Either way its speculation and the market and future will dictate a lot.
Stock hit month highs today, highest since the dilution crash. Last 2 days definitely a bit of a perk.
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Post by Yelk on Apr 23, 2020 20:13:35 GMT
I asked Jason, @jnap5c, to look into it. Will be interesting to see if his opinion changes once he researches it. Of course its just his opinion and won't change my investment, but respect his thoughts. His initial responses: - I’ll take a look at it, but I don’t know how excited I’ll be about an IV formulaiton of generic meloxicam for the post-op setting. That doesn’t seem at all differentiated to me. But I’ll take a look.
- I’ll look, but most of the “post-op” setting is opioid, like bupivacaine and stuff like that. So many companies have tried to make injectable post-op drugs that the market is saturated with cheap stuff
I don't know how much knowledge he has in that area, his knowledge is all over biotech, so if he does research it I'll be interested in the researched response rather than the quick opinion.
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Post by Yelk on Apr 24, 2020 2:24:00 GMT
Also, I found it interesting fact. REPH when it started in 2014 went through almost the EXACT same share price drop when a P2 trial messed up. The stock went from $8 to $2 in a few weeks and then within a year traded in the low teens.
So this is not the first time the CEO of the company has seen this story. The only difference is a trial versus a commercial product in our story, so if anything I think we have better odds than history. Also what an amazing call by that author... even went to share price he guessed. 400% profit under a year.
Some info on the marketing plans:
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Post by JHam on Apr 24, 2020 4:44:11 GMT
I asked Jason, @jnap5c, to look into it. Will be interesting to see if his opinion changes once he researches it. Of course its just his opinion and won't change my investment, but respect his thoughts. His initial responses: - I’ll take a look at it, but I don’t know how excited I’ll be about an IV formulaiton of generic meloxicam for the post-op setting. That doesn’t seem at all differentiated to me. But I’ll take a look.
- I’ll look, but most of the “post-op” setting is opioid, like bupivacaine and stuff like that. So many companies have tried to make injectable post-op drugs that the market is saturated with cheap stuff
I don't know how much knowledge he has in that area, his knowledge is all over biotech, so if he does research it I'll be interested in the researched response rather than the quick opinion.
Yes, I agree with Jason Nap here. This is the whole reason why this drug is appealing. Where I disagree is that he says this as if hospitals are begging for more post-op opioid pain management drugs. They clearly are not. Everyone is trying to get away from them as much as possible. All one has to do is take a look at Ofirmev and Exparel to see not only the value of these drugs in the hospital, but in terms of sales/revs. Also, on Jason Napodano. I'm sure you aware, but he recently spent time in the slammer for securities fraud. That doesn't mean that he doesn't have knowledge in biotech and that he hasn't learned from his mistakes, but I take what he says with a grain of salt. Especially when he's not getting paid to promote a stock. endpts.com/former-biotech-analyst-jason-napodano-sentenced-to-a-short-stretch-in-a-federal-prison-for-securities-fraud/
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Post by JHam on Apr 24, 2020 4:59:10 GMT
If I were buying above the warrant exercise price, then maybe I would be a little more concerned. I own shares 39% below warrants and 95% below the pricing of the offering, s right there I feel that my risk, and anyone else who buys now‘s risk, is mitigated. The company is currently trading at $2.65 a share, or $46M market cap. I have already factored into my thesis the dilution at $3.25 and $4.59. Fully diluted we’re looking at 32M shares roughly (going off of the top of my head). Sure, that will affect the value of my shares. However, it’s a drop isn the bucket when you consider the potential value of Anjeso. BXRX was spun off for one reason, acquisition. They looked at the competition, Ofirmev and Exparel, knew they had the same potential and purposefully restructured to make it easy for any bidders when the time comes. Would I be a buyer at $100M? No. $40M is much less risky. And again, is 95% lower than what the investors just a paid. Keep in mind, Exparel trades at a 4x multiple of revenue. If Anjeso has peak sales of only $50M and only trades at 2x revenue, fully diluted, it would still be worth more than it is now. If peak sales meet the $350M revenue target and it trades at 4x multiples like its competitors, fully diluted, then we’re looking at about a $40 share price. Anywhere in between is still an incredible return on investment. As I explained before, the last round of dilution crushed shareholders at the time and was poorly managed. Again, I think a lot of that had to do more with corona than anything. After getting FDA approval, management panicked about the remaining line from their ATM, and likely also panicked about being able to raise money from the market, and did what they had to do. I really think it’s as simple as that. Regarding your comment about the $188M in obligations, I read the same comment section at SA. I agree with the author of the articles’ reply, which was the following: “Total liabilities were $71 million as of the end of the year. Of which $63 million are milestone payments that get paid if and when milestone targets are reached, which only happens if they are successful. Otherwise they don't have to pay it. If the drug is successful, this effectively reduces the gross margin, and I used the reduced gross margin, so it's already included in the analysis.” He’s right. Again, if the drug does what we hope, then it is a small prove to pay. As for credibility. The amount of institutional ownership leads me to believe that they feel there is something good happening here. The SA author is good in my opinion, and I don’t find anything unusual at all about him averaging down. I’ve down the same before too. Sometimes you laugh to keep from crying. It doesn’t change the thesis for investing in this company. Ultimately, I think it will end up somewhere in the middle. I’d gladly take a buyout at $12 a share. Heck, I’d take $6. At these levels, where cash is no longer an issue, I don’t mind forgetting about this one and coming back in a year or so and seeing where we’re at. Thanks so much for the reply. I 100% agree everything you said. One thing though, some comments of people who have long term personal relationships (if you can call it that) with the CEO suggested she would not want to sell the company and that this would be her baby. Changing companies would also signal some longer term direction. Of course like you said it doesn't matter as upside is upside, but still interesting. Either way its speculation and the market and future will dictate a lot.
Stock hit month highs today, highest since the dilution crash. Last 2 days definitely a bit of a perk.
Then they will become their own CDMO. That will work too. Again, just to be really clear. I am not saying that there is nothing that can go wrong here. The recent cash raise was a disaster for shareholders at the time. I bought after that so it didn't affect me. So that is one major item that has been de-risked (unless they felt that they still didn't have enough cash, but that would be insane). Sure, the warrants will come into play at $3.25, but that is 40% higher than where we are now. And if/when we reach those levels that bodes well for overall trajectory of things. More shares would hit the open market, but imo, that would mean that people saw he tremendous upside here. Again, I am coming at this from having a cost basis at $2.37. Even if Anjeso is a total dud, when you add up existing cash before the raise, plus cash added from raise and full exercise of warrants (figuring in the dilution as well), I'd still be in the green. My biggest concern, is if COVID-19 stays around for a, making horrible conditions for the market and warrant strike prices get re-priced. I'm very doubtful that will happen, but after experiencing it with XSPA not too long ago (albeit it a completely different situation) it is a possibility. I need to go read through the actual agreement and clauses regarding those warrants.
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Post by JHam on Apr 24, 2020 17:18:06 GMT
I asked Jason, @jnap5c, to look into it. Will be interesting to see if his opinion changes once he researches it. Of course its just his opinion and won't change my investment, but respect his thoughts. His initial responses: - I’ll take a look at it, but I don’t know how excited I’ll be about an IV formulaiton of generic meloxicam for the post-op setting. That doesn’t seem at all differentiated to me. But I’ll take a look.
- I’ll look, but most of the “post-op” setting is opioid, like bupivacaine and stuff like that. So many companies have tried to make injectable post-op drugs that the market is saturated with cheap stuff
I don't know how much knowledge he has in that area, his knowledge is all over biotech, so if he does research it I'll be interested in the researched response rather than the quick opinion.
Well, we’re now 25 points (7%) away from those $3.25 warrants.
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Post by Yelk on Apr 24, 2020 17:44:46 GMT
Might hit $3 today, wow JHam, what an entry you made. I mean who knows what happens from here, personally I was okay with the stock being stale and dipping a bit but this is the first bullish move into the gap towards the warrants, you are already up a lot!
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Post by Yelk on Apr 26, 2020 2:43:16 GMT
I'm not the most knowledgeable on warrants so thought I'd finally learn as it is a big part of this investment. Seems not all warrants created equal but either way pretty terrifying. So that offering for common stock, they can turn around and sell those 7.5 million shares driving the share price down more to get rid of it and then short the stock to death with safety with the warrants. Then of course how it acts as a ceiling so people won't be as interested to invest in the stock. Catalysts are there I agree but further out which presents a problem. Anyone buying this last week at these levels are people that love the chart, are not very aware of the dilution, or (us) those who believe the value will push through the warrants long term if all goes well. Even if the company did a poor job of commercialization and the drug wasn't as good as advertised I feel like if it has any validity at all (25% of their projections) we should still see considerable upside eventually.
Half the shares are held by people not selling so that helps a lot to get to the warrants and I think that's an advantage we have here over crappy companies with 30-45M shares all in retail hands. All it will take is to get moving and a some productivity to get pushing on first set of warrants. Are the clauses for warrants in the 10K/8Q? You mentioned checking them out. I'll take a peak.
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Post by JHam on Apr 26, 2020 6:48:10 GMT
Might hit $3 today, wow JHam, what an entry you made. I mean who knows what happens from here, personally I was okay with the stock being stale and dipping a bit but this is the first bullish move into the gap towards the warrants, you are already up a lot! It was at $3.03 at the time I wrote that.
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Post by JHam on Apr 26, 2020 7:16:37 GMT
I'm not the most knowledgeable on warrants so thought I'd finally learn as it is a big part of this investment. Seems not all warrants created equal but either way pretty terrifying. So that offering for common stock, they can turn around and sell those 7.5 million shares driving the share price down more to get rid of it and then short the stock to death with safety with the warrants. Then of course how it acts as a ceiling so people won't be as interested to invest in the stock. Catalysts are there I agree but further out which presents a problem. Anyone buying this last week at these levels are people that love the chart, are not very aware of the dilution, or (us) those who believe the value will push through the warrants long term if all goes well. Even if the company did a poor job of commercialization and the drug wasn't as good as advertised I feel like if it has any validity at all (25% of their projections) we should still see considerable upside eventually. Half the shares are held by people not selling so that helps a lot to get to the warrants and I think that's an advantage we have here over crappy companies with 30-45M shares all in retail hands. All it will take is to get moving and a some productivity to get pushing on first set of warrants. Are the clauses for warrants in the 10K/8Q? You mentioned checking them out. I'll take a peak. That's the point. They like dumped those shares immediately. I doubt they thought it would tank all the way down to $2.20, but that's where the warrants come into play. There is no need for them to short now when we are already below Series exercise price. Since they probably lost money dumping the common shares (which also helped to cause a panic sell among retail), they are going to want to make sure they make their money from the warrants. That's why I don't think they are going to exercise and dump as soon as we cross the strike prices. They are in the red at the moment and know that if they let it run, they'll break even and then some. If they are not aware of the dilution then they should probably cease from trading stocks all together. Even if the drug is a total dud. Say peak sales of $20M. if it trades at 4x revenue plus cash on hand (probably around $40M at the moment after the raise) plus cash from warrants, - (minus) corporate/commercialization costs over the next few years, I still say the fair value would be around $140M. Fully diluted with 32M shares out that would be a $4.37 share price. Not a bad gain from these levels. Again, a lot has been derisked since the huge raise is out of the way. The full dilution is already factored into my numbers and I still like it. Now it's just a matter of them not botching the Anjeso launch.
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