sell on fact or a re-rate on news? , page-14

Kevin...

For the most part it is a good bunch of posters over here...some perhaps a little excitable (understandable given the rise), but none the less, most have good intensions.

A few exceptions, but I notice you did not criticise those who are negative this company for not responding...only the "know it all's"?

I really think there is no need to assume the worst in everyone...and then go on to taint the threads with snide remarks.

Your post was uncalled for in my view.

As for the original post from dappadan...

Simple fact is, I think it is an impossible question for all sorts of reasons...certainly one that cannot be answered easily;

1. None of us know the results yet...so how can anyone comment on potential market reactions on the release of news?

2. But...assuming the results are good enough to "go to the next step", what should we use as a starting price? We don't know this either because we are not there yet. I suggest...if the stock has been bought up to $1 prior to positive news, then it will most likely come down...if however the stock is sold down to 0.1c prior, then I suspect it will probably go up...lol...I think that should just about cover the potential ranges.

3. But what "news" are we talking about anyway...perhaps the question should be; what will the price be after the next 5 or so possible announcements?

There are numerous activities on the go, some of which include;

a. ATL1101 - Afandin's exclusive option to license ATL1101...with the 6 month deadline approaching, news can come from here at any time.

b. ATL1102 - The Company has been seeking a partner to
continue the development for the MS indication, among other areas...again, something could develop here at any time.

c. ATL1103 (for Growth and sight disorders) - results from recently completed phase 1 trials due any moment over the next 3 weeks. Initial results (no adverse effects), have already been reported and de-risked the stock considerably...something I suspect the market does not quite understand the significance of.

d. The next lot of results are also expected to significantly de-risk the company, leading to numerous options including partnering, funding, or maybe other corporate activity including investments by, or even unfriendly advances from, large biotech companies...or even a takeover from Isis themselves as a form of maintaining control of the drug?

The results being analysed by ANP from these trials are two-fold;

d1. "The primary objective of the study is to assess the safety, tolerability and pharmacokinetics of ATL1103 administered by subcutaneous (under the skin) injection", and;

d2. "A secondary, but important objective of this study, is to obtain key data on the effect of ATL1103 on IGF-I levels in the blood of the trial subjects. Reducing elevated levels of serum IGF-I to normal is the therapeutic endpoint in the treatment of acromegaly, and reducing the effects of IGF-I has a potential role in the treatment of diabetic retinopathy, nephropathy and certain forms of cancer".

e. ATL1103 (Concurrent trials) - Independent group investigating ATL1103’s effect on exploratory markers of cellular activity relating to cancer...this could be released concurrently, or as a separate report. Again, this could be released at any time.

f. Isis (major partner), currently gaining significant exposure in US and generally recognised as potentially sitting on the "next big thing" in biotech. With only a limited number of Antisense drugs currently in development, and the first of these about to gain market approval, any attraction to Isis' Antisense range can be expected to extend to Companies with direct exposure to said range, such as ANP. On this basis, the more exposure on a global scale for Antisense drugs the better.

g. On the issue of exposure...Isis is presenting at a major biotech event on Wednesday night our time...some have speculated that ANP may want to release their results to our market before then...so their major partner (Isis)can showcase the results at this presentation. If this were to transpire, then I suggest we could be in for a sustained buying spree...firstly from out market and those already watching, then subsequent to the Isis presentation we could see another wave of buying (mostly investors mind you). In any event, even if results of the trial are not released by then, Isis is still likely to highlight ANP's current trial status to this important global audience.

Further on the Isis/ANP relationship...I suspect Isis would be well aware of ANP's preliminary trial results and are likely to be in contact with ANP in a professional capacity in this regard (perhaps running a peer review of results, in their capacity as an Antisense expert).

So, if ANP do not release results via the ASX prior to the Isis presentation, then I will be taking very careful note of the "language" used by Isis if/when they mention ANP and ATL1103 trials. If results are known, but not yet ready to release...and are good as expected...then I would expect Isis will give ANP special mention (without discussing the results), to help highlight the successful results to come.

Of course, we have other activities and/or potential clues to what might be driving the current run on the stock, and that may impact high/low trading ranges in ANP...which of course will also impact the answers to your question...

i. The directors are extremely conservative types (ex CSL, Orica, Faulding, Circadian, and current government and highly respected industry positions)...so significant industry cred...yet, they were clearly very excited and unusually animated at the recent AGM.

ii. Look at the recent trading history in ANP...it appears to have been held back for a prolonged period of time...perhaps falsely? So the current "rise" may well be nothing more than a return to fair value, from a previously manipulated price range. Given the potential of ANP's suite of products and growing interest for Antisense drugs in general, a market cap of just $28m at Friday's close (given what they already have, regardless of what they are about to have), seems very low. Of course, this was even lower when the share price was under 1c recently.

v. Options conversion underway...this group may be exacerbating the current interest in the stock in an attempt to get the highest possible price for their stock. If we assume this to be the case, then they may have also been responsible for holding the stock price down until their options were issued? To get this in perspective however, about a billion shares have traded in recent weeks, compared to just 26m or so options that have been converted, and they have been converted at prices that are not that much lower than average traded price of the billion shares that have traded...so it would seem a lot of work for a pretty minor return.

Nup...I think the options have very little to do with the run on the stock, especially considering those converting them have clearly had to do so in stages...as they have sold each time...suggesting they didn't have the free cash to convert them all in one hit, let alone generate a billion share trader churn?

To be honest, I would not be surprised if the options are being converted with the support of the company...it brings in some needed cash, and clears the way for the announcement.

iii. There is a chance we have a large accumulator (more than one?), in the market. There has been similar activity (as we have seen in ANP of late) over at GCN, that resulted in a major shareholder appearing. We may or may not get a similar notice, but it does not stop several buyers accumulating up to 45m shares or so without having to notify the market.

iv. We may only be looking at a day-trader driven buying spree...but if so, what set it off, and what will end it?

v. There is significant money moving into biotechs of late...ANP may simply be riding this wave, which has grown exponentially given their current trial status?

w. Finally, assuming the results of the trials are positive...and unambiguously so...the market can start to apply a semblance of measure to the potentiual future value of ATL1103 to ANP. The potential target market for ATL1103 is quoted at $500m or so, with some $200m expected to freely flow to ANP once a successful product hits the market. Admittedly, there will be plenty of water to flow under the bridge between now and then, but if any form of forward pricing were to be reflected in ANP's share price, the numbers really are quite staggering.

Assuming we had a green light now, and that ATL1103 was a near certain candidate...then assuming "someone" spends $50m advancing ATL1103 in 2012...and another $100m in 2013...and then income ramps up at say 50m per year after that (to their peak of $200m indexed at say 2%)...and using a 10% DCF model...I get NPV's today of about $840m.

I see the gap between ANP's current market cap of $28m, and a perfect-world potential NPV of $840m, as a measure of the likely risk the market is applying to the success or otherwise of getting their products to the market...see NPV workings below.

Given the significant divide between the two, it is abundantly clear the market sees many risks ahead of us.

Each de-risking event however should help to narrow that gap!

Cheers!