Ouch, Invion…

Wow!

Some days I just can’t get the timing of information and commentary right. No sooner had I posted on Invion (ASX : IVX), commenting on their lousy Lupus data announcement, then they “released the hounds” on their private placement. I suppose given the trading halt, this was anticipated and so yes, I am feeling like a bit of a loser at the moment.

But not nearly as big a loser as IVN shareholders must be feeling right now. Holy crap!

The terms of this financing are nothing short of remarkable. For a mere $1,001,000, the company just gave away 30% of the company. How? Because the equity purchase has basically got 250% warrant cover. In executing this private placement they have also effectively given up control over the company for a teeny million bucks (at some indeterminate point in the future). Not only will the institutional investor be laughing all the way to the bank, but Greg Collier probably paid 5-6% of the financing to H.C. Wainright for the pleasure of shafting IVX’s shareholders. Insult to injury.

I will bet you a good steak dinner that this ends up being a miniature form of Prima Biomed / Ridgeback all over again. Basically the formula is:

  1. Spin the data
  2. Pump the stock
  3. Short the hell down to all the “Mum and Dad” investors
  4. Exercise the options for what effectively amounts to a risk-free trade.

It also helps, in hindsight, to explain why they cut the lupus Phase II short (probably didn’t even start the last cohort of patients at 300mg) – they just didn’t have the cash and needed to start the spin-machine up. This situation should also tell any holder of a share in this company everything they need to know about the quality and future prospects of their investment. All I can say is this : I’m sorry.

Pathetic, Invion. Greg, this should be your last CEO job. Ever. No wonder American biotech investors think we’re so stupid.


 

Awesome Photo Credit: Ryan McGuire. http://www.gratisography.com/.

2 thoughts on “Ouch, Invion…

  1. Hi Christian,
    Very interested in your thoughts on Invions latest trial results for smoking cessation. I am a long suffering shareholder (10 years), and wondering if there is any light at the end of the tunnel.
    Wishing I had someone with your expertise advise me back then.
    Regards
    Michael

    Like

    • Dear Michael, sorry for my slow reply. I think the only way to no longer be a long-suffering shareholder, is not to own the stock. My opinion, and that of several experts in the field, is that there is no such thing as a “smoking cessation” patient population. Therefore kind of hard to run a clinical trial in it…

      I’m sorry for your losses. Part of the reason why I started this site was not to talk people out of investing in biotech/pharma. This space is risky but the rewards are also great. Rather I wanted to draw attention to companies that I think are additionally risky. The recent INV102 data didn’t knock my socks off.

      Like

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