Axonynx Inc.(AXYX) Can a company with 7 employees that just moved from the penny stock exchange on to the NASDAQ and lost $905k this past year be worth over $200 million dollars? It can if it puts out a flashy press release, CNBC mentions it, and daytraders come out in droves and keep paying the ask. But people who buy at these levels will end up like those who bought ENC and JAKK when I put out my SELL and SHORT recommendation a few days ago - holding the bag. Here’s the story: biz.yahoo.com David Small who heads a medical laboratory at the University of Melbourne, Australia, announced that he found an enzyme that appears to be a diagnostic marker in people who have Alzheimer’s disease and it may give a clue to detecting the disease in patients. Axonyx is developing inhibitors to these enzymes, hoping that they can be used to treat Alzheimer’s patients. Here’s some info from SEC quarterly report filings. Direct quotes are in parenthesis: Axonyx is funding this research with a 60,000 grant. Wow. No wonder why it was on the penny exchange.
“On October 1, 1999 Axonyx Inc. signed a Sponsored Research Agreement with the University of Melbourne (Australia). Under the Agreement, Axonyx commits to fund a research project at the University of Melbourne to develop a diagnostic test for Alzheimer's Disease. Axonyx undertakes to fund this research for a three year period for approximately $60,000 per year”
From the original filing to put the stock on the penny exchange:
“The Company competes with many large pharmaceutical companies that are developing drug compounds similar to those being developed by the Company, especially in the area of acetylcholinesterase inhibitors. Many large pharmaceutical companies and smaller biotechnology companies have well funded research departments concentrating on therapeutic approaches to AD. “ With a 60,000 budget its going to blow out MERK, AMGEN and big budget research labs and find a cure for Alzheimer’s. Believe it and buy the stock. These 7 employees are going to have to work around the clock to do it. When it filed to be listed on the penny exchange it had 4 employees, so the addition of 3 more is a big step forward.
Massive dilution What made Creative Host such a compelling SELL and SHORT recommendation was that insiders and pump and dump outfits had registered to sell millions of shares on the open market. Guess what. Yep, huge blocks of shares of AXYX can now be sold on the open market. AXYX sold 156.5 warrants of 4,000 shares each that are exercisable at a strike price $11 per share.:
“The Company completed its private equity financing in Europe. During the period January 1, 2000 through March 31, 2000 the Company sold 156.5 units at $25,000 per unit. Each unit consists of 4,000 shares of common stock and 2,000 warrants to purchase common stock at $11.00 per share. In connection with the private placement the Company issued 39,600 shares of common stock and warrants to purchase 19,800 shares of common stock at $11.00 per share as finder's fees. “ |