Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
It sure looks like the bears are trying to force this thing down before the West Coast Wakeup. You know, the time when people out here have gotten out of bed and looked to see what’s happened in the world. Today’s high so far is $1.30, which is the highest it’s been since the 1-for-15 reverse split. And it’s now trading at $1.18.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
Today marked Day 1 of the 10 consecutive days to regain compliance with Nasdaq’s listing requirements of closing at or above $1.
In the last two minutes of trading, 747,907 shares moved. Despite the downward pressure, it looked unlikely for Evofem to close below $1 today. I did not expect the stock price to dip to $1.06 with two seconds left–with trades at 3:59:58 ET totaling 138,305–and then close at $1.10 when someone bought a 35,748-share chunk. But I’ll take it!
If you hadn’t heard of Defense World, know that I just learned that they exist. Their About Us page says:
Launched in 2003, defenseworld.net has grown into one of the most prominent defence and aerospace news portals in the world. Our focused reportage of defence procurement matters besides the coverage of exhibitions and conferences in the defence sector has attracted and retained readers which include procurement officials, industry executives and other key elements of the defence industry chain.
So why would this site be writing at about Evofem Biosciences at all? Why a headline that sounds scary? Why can’t they choose between defense and defence?
We knew that the bears wouldn’t go quietly. And I found the headline to be misleading in giving the impression that Evofem is sinking when the stock is up 205% over the last month. Is this an indication of a short-and-distort push? I can’t imagine that that tactic–which is undoubtedly illegal–will really work, given that Evofem makes a non-hormonal birth control gel that’s FDA-approved and ready to go.
I will continue to look out for strangely placed, bad-news-if-you-don’t-know-better pieces about Evofem. I still maintain that what I see as an effort to destroy Evofem is a sign of confidence by the bears that it’s a real threat to break through.
Someone on twitter said something to the effect of smashing $1.20 would ignite the short squeeze. I’m not sure that that’s the number. I just hope that any short squeeze of EVFM results in a long future of self-determination for the company.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
I am nervous about EVFM becoming the darling of people who get jittery easily. I believe that Evofem Biosciences is an important company that makes a product that can benefit this world.
Recently I saw a video that I think missed the point entirely:
I think it’s obvious that the jump in the price is due to the Supreme Court overturning Roe v. Wade. And that it’s not just delisting that is a reason that it’s hovering around $1, it’s that delisting could bankrupt the company–unfairly, in my opinion. I worry that people who simply watch this video think that there’s randomness where I think it’s by design where the short sellers/bears want to sink the company while the bears–this writer included–want it to succeed.
At this moment, it’s 12:43am in Los Angeles on July 5, 2022. The booms made by illegal fireworks from Independence Day celebrations are interrupted by still silence. But only briefly.
The market has been closed since July 1.
Google finance still shows EVFM at $0.91 at close with $0.92 as the after-hours price.
That will change at 1am.
My fear is that the public will rush into EVFM with the hopes of making a quick buck and will then sell all at once and depress the price. Right now there’s a weird balance between the bears and bulls. Of course I believe that the bears are acting in a way that violates 15 U.S.C. 78i (d)Transactions relating to short sales of securities in addition to other things, but the bears and bulls are predictable. People new to Evofem could be wildcards who push the stock price high and then leave in a moment. I don’t blame anyone for an investment strategy done earnestly. I just care for the company I’ve held in my portfolio since May of 2021.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
I told my wife yesterday that if I were in the position to fight the shorts on the level we’re seeing, I’d regroup and go for the Monday and Tuesday approach of make the shorts try to push it down below $1 instead of trying to fight up to cross a dollar like on Wednesday. I hit the Publish button this morning at 8:02 (11:02 ET).
It was in the $0.80s when I started writing and around $0.97 when it went out. Since then it’s been above $1 and fighting to keep that ground.
In the event that (i) the Funding Threshold has not been met on or prior to the first anniversary of the Initial Closing, or (ii) at any time after the six-month anniversary of the Initial Closing, the Company is unable to issue the full amount of shares issuable upon conversion of the Notes or upon exercise of the Warrants, the noteholders will have the option to require the Company to repurchase all or any portion of the Notes in cash. In such case, the redemption price will equal 110% of the Outstanding Balance plus accrued and unpaid interest. In the event of an Event of Default or the Company’s Change of Control or liquidation (in each case, as defined in the Securities Purchase Agreement), each Purchaser may elect, at its option, to require the Company to repurchase all or any portion of the Notes in cash at a repurchase price equal to the sum of (x) three times the sum of the Outstanding Balance plus (y) the aggregate value of future interest that would have accrued under the call principal amount from the period commencing on the date on which such amount is declared to be due and payable through the fifth anniversary of the Initial Closing.
Can you think of higher praise for what Evofem is doing?
If it’s true that Baker Bros. is the firm shorting EVFM, I believe it’s likely because the company itself has such upside that Julian and Felix Baker see it as a way to make moar billionz and keep it all to themselves. So much so that they’re willing to borrow at crazy rates just to make sure that happens.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
The amount of shorting and the money behind it is, to me, unfathomable.
To agree to a fee of 210.6% to borrow shares to sell? Is it commitment? Lunacy? Do they really expect EVFM to go to $0?
As I wrote about yesterday, going to $0 may just take NASDAQ delisting Evofem’s stock, which is a strong indication of why there’d be such a push to depress the price. But the deficiency notice NASDAQ had sent to Evofem just requires them to close at or above $1 for 10 consecutive days. And then I think the shorts are broken.
Yesterday the approach was different from that of the prior two days. On Monday, it was get it over a buck, and then the shorts came in and tried to press it down.
On Wednesday, it was the shorts pressing it down, and at the end those on our side (the good guys?) tried to push it up over a buck. And it didn’t work.
In my opinion, it’s craaaazy risky for the shorts to borrow at this rate with so much of a push against them.
We’ll see if the move today is to get it up over $1 and sustain it earlier.
I haven’t been in this game long enough to understand how this isn’t illegal market manipulation. I mean I think it’s not illegal short-and-distort because they’re not saying anything bad about Evofem, which, by the way, now has even stronger protections of Phexxi through a new patent.
So I still think it’s the fight for $1 close to get rid of these short sellers and we’ve got all 10 consecutive days to go to make the squeeze inevitable.
Meanwhile I grabbed more at $0.82 because I think it’s silly for it to be priced so low!
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
I had expected EVFM to close at or above $1 to mark the third out of the 10 consecutive days of $1+ price at close to again be in compliance with NASDAQ’s rules. Too long out of compliance results in delisting. The last 15 minutes looked like this:
The stock price had gone up from below $0.90 in the last 10 minutes to above $1.02, but wasn’t without extreme resistance.
With under seven minutes to go and about 89.6 million shares changing hands, a block of 71,519 shares looked to slow down the rise.
(also the 100K shares at $1.04)
Within five minutes of close and a stock price of soooo close to $1, blocks of shares were thrown up likely to slow down a runaway stock price. No one interested in the stock price going up would want to contain gains.
And the stock price stayed in the $1+ range until 40 seconds before close of market. It dropped down to about $0.94, at which point the rush to get it back over $1 kicked in.
But at the closing bell, a block of 518,750 shares were purchased, and it seems like offering more than half a million shares for below a dollar at the end was probably the work of those darned shorts!
Why the dollar?
I believe I have correctly identified the dollar mattering, but now I think it’s more than just the delisting. From Evofem’s financial statements:
In April 2020, we entered into the Baker Bros. Purchase Agreement with certain institutional investors and their designated agent pursuant to which we issued and sold secured convertible promissory notes in an aggregate principal amount of $25.0 million and warrants to purchase shares of our common stock. In October 2020, we entered into the Adjuvant Purchase Agreement pursuant to which we issued and sold to certain institutional investors unsecured convertible promissory notes in an aggregate principal amount of $25.0 million. Our failure to make payments as due under these notes would likely amount to an event of default. Pursuant to the terms of the Baker Bros. Purchase Agreement and the Adjuvant Purchase Agreement, events of default also include, but are not limited to, a material breach of representations, our failure to comply with our obligation to convert the related promissory notes, certain defaults of indebtedness and failure to perform or observe, and in certain instances, cure, certain covenants, including, but not limited to, covenants requiring us to maintain the listing of shares of our common stock on the Nasdaq Capital Market and to achieve cumulative net sales of Phexxi of at least $100.0 million by June 30, 2022. These agreements also limit our ability to incur debt, merge or, declare dividends. In particular and pursuant to the Baker Bros. Purchase Agreement, if an event of default occurs, each purchaser could elect, at its option pursuant to the agreement, to require us to repurchase all or any portion of the notes in cash at a repurchase price equal to the sum of (i) three times the sum of the outstanding balance, plus (ii) the aggregate value of future interest that would have accrued under the call principal amount from the period commencing on the date on which this amount is declared to be due and payable through the fifth anniversary of the initial closing pursuant to the Baker Bros. Purchase Agreement. This repurchase would materially and adversely impact our business, results of operations and financial condition, as well as increase our need to raise additional capital.
Will they get to the $100.0M in sales by tomorrow? I don’t know, but that doesn’t matter because that deadline was extended.
On March 21, 2022 (the “Amendment Effective Date”), Evofem Biosciences, Inc. (the “Company”), certain institutional investors (the “Purchasers”) and Baker Bros. Advisors LP as the designated agent of the Purchasers (the “Designated Agent”) entered into a second amendment (the “Second Amendment”) to the Securities Purchase and Security Agreement by and among the Company, the Purchasers and the Designated Agent, dated as of April 23, 2020 (the “Agreement”), as amended by that First Amendment to the Agreement, dated as of November 20, 2021. The Second Amendment amends the Agreement as follows: (i) effective as of the next date the Company completes a marketed and underwritten public offering by the Company of equity securities after the Amendment Effective Date resulting in aggregate gross proceeds to the Company of at least $20 million (the “Qualified Financing Threshold”), the covenant in the Agreement currently requiring Evofem to achieve $100 million of cumulative net sales of Phexxi® (lactic acid, citric acid, and potassium bitartrate) (“Phexxi”) on or prior to June 30, 2022 be amended to require the Company to achieve $100 million in net sales of Phexxi on or prior to October 31, 2022, and (ii) notwithstanding (i) above, effective as of the next date the Company meets the Qualified Financing Threshold and the publication by the Company of top-line results from its EVOGUARD clinical trial (the “Clinical Trial Milestone”), the covenant in the Agreement currently requiring Evofem to achieve $100 million of cumulative net sales of Phexxi on or prior to June 30, 2022 be amended to require the Company to achieve $100 million in cumulative net sales of Phexxi on or prior to June 30, 2023.
So I feel like my thoughts are correct that anything below $1/share of EVFM is underpricing the stock. And I picked up a bunch more shares today in sub-$0.90 territory.
We’re back to Day 0 of the 10 consecutive needed to be in compliance with NASDAQ’s rules, but everything indicates that the push for that 10-day streak is there.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion.
Yesterday I posted about how I think that we’re in the Fight for the Dollar stage of this short squeeze. Some more details: Evofem had gotten a deficiency letter from NASDAQ because EVFM had closed under $1/share for 30 days in a row. NASDAQ gives a 180-day period to get back into compliance, which means closing at $1 or above for 10 consecutive days of trading.
EVFM closed on Monday and Tuesday of this week at $1.07. That’s two days out of the 10 necessary!
Based on activity over more than a year, I figured that the short sellers are doing what they can to depress the price and force noncompliance. Now that there’s a short squeeze, it’s even more important for them to stop a push for that $1 at the end of the day.
My conclusion from yesterday is that all stock priced below $1 is underpriced when there’s a counter-push to make absolutely certain that it closes at a minimum of $1.
I decided to test this out earlier this morning by buying additional shares from $0.94 all the way down to $0.82. I could buy at all those prices because it kept falling. I thought the risk of being incorrect is nonzero but low. After all, I believe Phexxi is a game-changer, and recent news that a major pharmacy benefits provider is willing to pay for it is super encouraging.
As of writing this post, the price has climbed to above $1–which is consistent with my $1 floor expectation–and then has dropped down some–which is consistent with my short-sellers-want-it-to-close-below-$1 expectation.
There’s plenty of day left, but if today closes at $1+, that will mark 3 of the 10 consecutive needed to get rid of that exclamation point noncompliance icon.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion.
More than a year ago, I bought shares of Evofem Biosciences Inc. I have been there as it’s fallen and fallen and fallen. I bought more, and then those shares fell, too. So I bought more, and then those shares fell. Short sellers were living it up.
After too long of not being in compliance with NASDAQ’s rule that shares must be above $1 to continue to be listed, Evofem did a 1-for-15 reverse split.
On the Q1 2022 earnings call, the CEO said that Phexxi was FDA approved, and the non-hormonal birth control gel–which is an amazing concept–was ready for market but needed as many insurers as possible to OK to pay for the drug.
The CEO also mentioned that Roe v. Wade looked like it was going to be overturned by the Supreme Court, and while that was terrible, there may be a positive impact on the share price.
So I bought more.
And then the short sellers came in and forced it below the $1 mark again.
I bought more at $0.35. And then more again at $0.35.
But I didn’t set a calendar thing to remind me when the Supreme Court was due to go on summer break.
On Friday of last week, the Supreme Court overturned Roe v. Wade. The price of Evofem shot up. The stock was so heavily shorted that a tripling of the price was probably uncomfortable for the shorts.
It looked to me like the short sellers were doing what they could to depress the price of the stock by selling more of that. And I think they’re continuing to do that.
That means they’re digging themselves in deeper and deeper because the more they short, the more they’ll have to buy back to cover.
I didn’t buy more on Friday, and by Monday I’d felt that was a mistake.
So Monday during premarket trading I bought a bunch more shares.
Now, Evofem is in trouble (i.e. is facing delisting) if they continue to be out of compliance with the $1 rule. It’s in the interest of the short sellers to try to get it to close under $1 before the stock closes at $1+ for 10 consecutive days.
But I think that there’s at least one hedge fund that’s buying up the shares that the shorts are selling. What’s more fun than making money? Making money while screwing over your competitor! And if it bankrupts your competitor, extra special!
If there is a fund that is trying to make sure that the stock closes no lower than $1, shouldn’t it be an easy decision to buy shares of EVFM at all sub-$1 prices?
This is my first short squeeze. I never did anything with GME, AMC.
I don’t know what the long weekend will do. I also don’t know if the music will stop tomorrow.
I’m wondering what the BGFV short squeeze will be like.
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