ANVR

After a crazy trading day of rumors and speculation Avanir (AVNR 2.42 ↓-13.88%)’s AVP-923 garnered FDA approval. I’ll be the first to admit it, I missed that call, I was leaning 55% towards a CRL and thought it was a likely outcome. AS far as I can tell the last trading price was $5.25, so there has been a big gain in the market. I think I received 5 or 6 emails throughout the day noting that the company had received a CRL or at least asking me if they had received a CRL, but none of them were verifiable so I just summed them up to be rumors. I did some price analysis earlier this month with several different scenarios here, although keep in mind the company’s shelf is in effect and they can raise capital at anytime which is not factored into the price target. Good luck. 1 down BIOD (3.63 ↑7.40%) to go.

Also, I have received several emails asking me about price action on Monday. I’ll be honest, I don’t like drug approvals coming out on Friday because that allows time for the market to cool off. This happened to Pozen earlier this year, they received a drug approval and halted trading immediately only to see the share sell off on Monday. However, I don’t think that will happen here simply because AVNR had a 50/50 risk ratio priced in the stock. Or in other words, the market didn’t know what would happen, but with POZN their drug was an NSAID and the approval was partly priced in or anticipated more than AVNR’s drug. This also expains why the shares moved up sharply in afterhours, and they should. People that took the risk here were taking a big one so they should receive the benefit of a large gap up. It is a well earned reward.

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