Aviron Message Board - Msg: 1889153

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Biotech / Medical : Aviron

AVIR 3.490

+3.4%

Nov 12 3:59 PM EST

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To: nelli who wrote (86)	8/1/1997 10:32:00 PM
From: Brad C. Dunlap	of 645

You are right in that most companies want to announce a secondary asap after good news has been released in order to get as high a price as possible and ensure a successful financing. Once the final prospectus is released brokers and sales personnel that work for the firms performing the underwriting or part of the selling group are then allowed to solicit orders only for stock that is to be placed in the secondary. In no way will you see the secondary shares trade over the tape and you'll know when the secondary has completed and at what price when the secondary is announced publically of the completion. In the past brokers have been notorious for flipping the stock that is priced in the secondary into the open mkt after the secondary has been completed, however most underwriters have placed penalties[rebating commissions] to discourage such behaviour. The firms that participate in the secondary are usually the firms that have previously supported the company with research and this does create a real conflict in opinions as many analysts are swayed to issue friendly reports in hope of participating in any future financings where large fees can be generated. The underwriters consist of the lead underwriter and other firms that make up what is called the syndicate as well as other firms that join as part of the selling group. The syndicate members are responsible for selling the majority of the shares. I have much experience from consulting a trading dept. as to MM activities and battling for top notch executions on a daily basis. This is probably the least understood area of investing by the public and the press. There are new trading rules for MM's that have recently taken place in the larger nasdaq stocks and will eventually be phased in to the smaller companies with time. These rules dramatically level the playing field for the small investor but unfortunatly their still not effective in all stocks. For the larger stocks that are governed by these new rules, it practically eliminates the larger spreads that have been historically dictated by the MM. When the new rules become effective for AVIR you will see the spread set by the MM become greatly diminished. As far as a target for AVIR is difficult to say. As I mentioned before a 300 million mkt valuation for a company that expects to file with the FDA in 1998 and targets their product on the mkt for the flu seaon of 1999 is very attractive in today's mkt. Hec, most companies that are addressing large mkts and have completed a phase III are valued at dramatically higher valuations with some over twice as high. Unless I am mistaken about the patent issue, I do see that as keeping a lower valuation on the stock then otherwise expected. I also believe that more needs to be known about the rest of their pipeline which is not nearly as exciting as other biotech companies. I admit that there is potential vulnerability to this stock in the short run with a gap to fill around the 17 range. It wouldn't surprise me to see a pullback as these gaps do usually get filled. On the positive side a 500 -600 million mkt valuation on the data they produced in today's mkt would not be abnormal. This would mean as much as a double from today's price. However, like all biotechs any hint of trouble would put a smile on the short's faces.

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