Doesn't say much for their process...so, they have pulled the pin and added more tarnish to their reputation...all because they didn't want to put up $1.5m to underwrite a short-fall of an undervalued stock...as they said they would!!!
Most underwritings have an exit clause related to share performance, or sometimes negative index performance (ie, ASX200 falling by 10%)...all pretty reasonable...but I do not believe for one second the "fall" in ANP's price in the final days leading to the close of the spp (below their obvious exit trigger point), was not in fact a manufactured outcome.
Not pointing the bone at who...but in such scenario's it is usually a good starting point to look at those who stand to gain the most.
Frankly, I am relieved Patto's have pulled the pin...imagine the overhang from 83 million odd shares constantly hitting the 5-10% profit line (1.9-2c - usual pattern)...it would have been a ball-and-chain on price movement for months. Being well aware of their MO, the market would have simply sat and waited just below this level for as long as it took, month after month, without pushing through...knowing patience would eventually result in cheap shares.
Patto's will blame the retail market for pulling out...and whilst there is some truth to this, the fact remains the retail market (and perhaps non-retail market?), rightly or wrongly is becoming wary of buying into stocks during and/or after Patto raisings.
But, is this good or bad for us?
It appears to me we have enough cash to progress through Phase 2a...but most importantly, enough cash to keep negotiating with the DD party with a degree of self-sufficiency...after all, wasn't this always the main driver of the placement process?
We may well end up with more then we need, which is one of the reasons I was not 100% convinced the timing or size of the CR was optimal...if a deal had been/still will be struck, then we clearly took on more dilution than necessary.
Of course if a deal cannot be struck then you need enough cash to move forward independently, in which case, Patto's pulling out may well be the better outcome for us, which I will explain in a minute.
It can be a fine line with such things, and one very easy to criticise (perhaps unfairly?), after the event.
Anyway...
ANP have previously flagged we needed about $5m to go to Phase 2a with ATL1103...
So...lets look at what we currently have...
Tranche 1 = $2.6m Tranche 2 = $1.9m SPP = $500k Cash at hand = ~$1.2m Options conversion = ~$1.4m Tax and other credits = ~$500k
Total = $8.1m
ATL1103 (Phase 2a) projected costs = ~$5m
This leaves about $3.1m in the kitty (less Patto's fees - I trust they reduce these significantly now)...or about 2 years admin costs based on previous years.
If something were to go wrong, arguably they could still get to the end of the year (and preliminary Phase 2a results for ATL1103), with as little as $6m as a starting base.
Things will be tight, but there is enough to add significant value here just in time for the next CR...or major deal...whichever is best for shareholders based on the Phase 2a results!
If Phase 2a trials for ATL1103 start by mid-year as anticipated, then we can expect preliminary results by Oct/Nov this year...after which we have a whole new ball game!
In the big picture, Patto's dropping off is not all bad...not if you are an investor...and might not even be all that bad for traders either given the stock will be free of the usual post CR "Patto Period" overhang.
If a large enough percentage of the new lot are genuine investors in ANP, and equally genuine supporters of the Antisense technology, then they may even see reason to help "manage" the options well into the money by expiry...good for them (remember they got free options), and good for the Company (they get the extra cash from conversion).
All up, I see a reasonable outcome, which may be why the board wasn't keen to extend the SPP period...rather, I suspect they are probably reasonably happy with what they have managed to get, in which case they may have been equally happy to see Patto's pull the pin on the underwriting.
We now have a clean placement at current price levels, with no Patto's overhang and as a result, sufficent funding to add value to ATL1103 via Phase 2 trials.
Good luck all.
Cheers!
ANP Price at posting:
16.0¢ Sentiment: Buy Disclosure: Held
