With over 20 million shares shorted for Avanir Pharmaceuticals (NASDAQ:AVNR) the pressure is on the hedge funds and investment backers who have shorted this stock. Institutional ownership is rising, sales are increasing week over week, patient lawsuits are settling, and partnerships are mounting. So while all of this good is happening an article is released which seems to poke holes in all of those wins. But there is one fundamental flaw with the Gravity Research Report... The article is a fraud. Below is proof of the fraud which has wiped away $235 Million dollars in market cap in 1 week.
Gravity Research has no phone number listed on their website
Gravity Research's website is hosted and registered in Panama
Gravity Research does not list the executive team
Gravity Research was formed 3 weeks before the report was released.
Gravity Research has only released reports on 2 companies. One of which was AVNR.
Gravity Research has not evidence to support
Arguments Gravity Research Made:
- Lack of marketability for drugs to treat PBA
AVNR just got approval to market Nuedexta in Europe.... Why no mention in the article? This is long awaited by many sufferers in the EU and AVNR has patent protection there regardless of how the case turns out in the U.S.
- AVNR does not have sufficient capital to fully fund any other Nuedexta-related indications
The report fails to mention anything about the Merck deal which will provide over $60 million, nor do they mention that AVNR is in talks with Big Pharma for Nuedexta in the EU which would provide upfront payments if AVNR accepts a favorable deal.
- OptiNose will be unmarketable in terms of efficacy
Not only is there efficacy, there is a need. Check NuPathe's field research of Zecuity patch. They have found overwhelmingly that insurers are excited about the potential of saving costs related to migraine sufferers with nausea and they are going to cover it as Tier 3 drug at cost of $100. OptiNose will be the same.
It is unfounded to state that most doctor's feel that PBA doesn't need treatment. The behaviors exhibited in PBA range from mild to severe. When the behaviors are more toward severe they can be debilitating. I have seen Nuedexta dramatically change people's lives. People who were having numerous outbursts had them dramatically reduced or eliminated by Nuedexta. Nuedexta patients that were relegated to SNFs or ALFs have been able to return to their homes. People on their way to facilities due to their behaviors can stay at home with their loved ones after Nuedexta decreased their annoying behaviors.
The assertion that SSRIs, SNRIs or Trycyclics do a better job at treating PBA is false, in many opinions. The reason doctors are willing to try Nuedexta is that what they used in the past is not working. I am unfamiliar with any placebo-controlled studies that show similar efficacy for psychoactive medications compared to Nuedexta in the treatment of PBA.
The Gravity Research opinion conveniently neglects to mention all the side effects of psychoactive medications. All of these medications have boxed warnings for Serotonin Syndrome and other side effects. Many have a boxed warning that says they are NOT to be used in elderly patients. But most of the patients who get PBA are in fact elderly. Psychoactive medications also can produce weight gain, dyslipidemia, sedation, increased risk of falls and other problems. Compare this list to Nuedexta, which has NO boxed warning. It does have a dose-dependent effect on QTc, but this can be checked via a ECG. Nuedexta can produce dizziness and diarrhea primarily and does have other side effects. But it is a fairly benign drug. Their analysis also fails to mention that CMS has ordered skilled nursing facilities to reduce their off-label use of atypical antipsychotics. CMS wants to get residents off of these medications because they are very expensive and have many side effects.
This is only a few reasons why the reports by Gravity Research is a tool for the shorts of AVNR to cover there 20 million shares before news of the final 2 patent wins, EU partnership, profitability, and new clinical trials are released.
Disclosure: I am long AVNR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.