I predict that once the new board has spent a few hundred k on consultant fees looking into the commercial viability of ATC, they will eventually reach more or less the same conclusion as the old board, viz., that while ATC is likely to pass phase III and get FDA approval, is it not commercially viable. (Incidentally, while the new board don't realise it yet, talking to the FDA will shed no light whatsoever on the commercial viability of ATC).
In the long term, i think the wisest thing the new board could do would be to donate ATC (assuming Shire lets them) to an institution like the Gates Foundation. Assuming Gates puts up the final $40-50mill to get the drug over the line, ATC could then be used (free of charge) as a niche salvage therapy in Africa. I think this would be an excellent outcome for all concerned.
CZD was wise not to vote, as the (understandable) desire to remove Drona was too great. Drona et al have been massively exaggerating the commercial potential of ATC over the last 18 months in order to keep their jobs and raise capital. The irony is that now that Drona etal are finally telling the truth about ATC, they have been kicked off the board!
Lets just hope that the new board don't fall into the trap of the old board in misleading shareholders about the commercial viability of ATC in order to keep their jobs.
Over the long term, I see CZD slowly increasing their position in AVX at around cash backing. Once the dust has settled on ATC in around 6-9 months, I see CZD with a 20%+ holding politely suggesting that some kind of merger with CZD take place (to increase the cash pile to around $30mill). Post merger, some of this cash would be well spent funding one or two of the more attractive assets in CZD's pipeline. However, CZD is likely to only need a relatively small proportion of this cash to fund its pipeline. IMO, the lion's share should be used to (i) buy other attractive biotech assets for a song or, (ii) take advantage of this risk averse market and buy a strategic stake in an undervalued biotech company with significant near term revenue potential (eg., ACR @ $1.50, BTA @ 80c, ACL @ 40c).
AVX Price at posting:
3.6¢ Sentiment: Hold Disclosure: Not Held
