Pinned straw:
** Edit 27/10/2023 — I’m rebooting this one as I think a pretty obscure arbitrage opportunity of a 20% upside exists at present. I remain overweight in AVR, but am still giving this one some thought for increasing my IRL portfolio. Cap raise at $20 (with nil options) has just been completed with the same institutional investors holding the $24 and $29 unlisted options. I don’t expect those $20 shares to be sold. I know Anteris is not for everyone but it may presently have a broader short-term appeal given success of the EFS.
Prepping for the Clean Sweep
Anteris’ director options are getting some extra attention this year in the form of an extraordinary general meeting announced yesterday [ASX announcement] and I have a hunchpothesis as to why.
For these next few quarters — more than any previous ones — the stakes for Anteris to have access to quick, minimally dilutive, non-outsider capital are at their highest. This is necessary to: 1) ensure there is no interruption to, or distractions from, the EFS; and 2) bolster the (already strong) defences against a hostile takeover at this juncture. My hunch is that CEO Wayne Paterson wants full control of the narrative during takeover negotiations and is prepared to pay $24 a share from his own wealth if necessary.
I think he wants his feet planted on firm ground when he is negotiating the sale of the company which he is on record as saying is worth over 5 times my valuation. You can’t do that if your company is desperate. You can’t do that if someone else is paying sub $20 per share on market while you are banging your fist on the mahogany boardroom table boldly declaring $200 is your walkway.
Options aren’t new to Anteris, nor is the absence of some walking-around money beyond a quarter or two. In the past that’s never, of itself, been enough incentive to commit really significant executive bacon to this ham sandwich on a regular basis. But we are at the pointy end now.
The fact that this is happening when the share price is around $20 presents an opportunity for the traders among us. If I wasn’t already fully invested (both in Strawman and IRL) the quick 20% upside would be a hard bet for me to walk away from. But my eye is on the long-term bullseye — on what I am increasingly confident is a very conservative 4 bagger from here. My valuation remains unchanged.
Slideup
@PabloEskyBruh It seems like they really need these options converted to keep going. As someone who has followed Anteris for a while when do you think their valve would be released to the market if they don't get taken over or run out of cash first? Even if the options all get taken up that is only another 2 quarters at the current cash burn rate and it doesn't look liek they expect this to slow down any time soon. I find this one interesting but I am not sure exactly which end game the company wants.
I was looking at the 4C the other day and noticed they only have $20m cash left and are burning $12m a qrt. In the 4C the have 1.7 quarters of cash remaining and in response said "8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
Answer:
• During this quarter, the Company raised gross proceeds of $1.7M primarily from the conversion of unlisted options. Since 30 June 2023, the Company has raised a further $812k from the conversion of unlisted options.
• At the date of this report, 2,038,099 options held by external investors, with expiry dates between now and 2025, are in-the-money and could be exercised at any time. If all of these were converted, they would generate $22.9m of capital for the Company. It is anticipated that some of these options will be converted prior to maturity.
• The Company has an established track record of successfully raising new capital and debt facilities. The Company has continued to demonstrate successful results with its Research and development program including the one-year results of the First-in- human trials for both cohorts 1 and 2 as well as the 30-day results for cohort 3. The Company is also preparing for an Early Feasibility Study in the United States. All these factors are anticipated to be supportive of continuing to be able to raise new capital and debt facilities in the future.