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Anthera Pharmaceuticals Inc (NASDAQ:ANTH): Ignore The Lawsuits

Anthera Pharmaceuticals Inc (NASDAQ:ANTH): Ignore The Lawsuits
Written by
Chris Sandburg
Published on
February 23, 2017
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Recommended read for background: A Discount Entry OpportunityLevi & Korsinsky, Lifshitz & Miller, Bronstein, Gewirtz & Grossman, Johnson & Weaver – just some of the LLPs flooding the PR streams for Anthera Pharmaceuticals Inc (NASDAQ:ANTH) at the major financial news outlets. Every one of these companies claims the same thing – that Anthera misled investors as to the chances of success in its lead study program, and that this misleading is negligence on the part of the young biotech. Further, that as a result of the company's negligence, shareholders who lost X amount of dollars on their holdings when the company took a hit at the end of last year are due some financial compensation.Don't get us wrong, there are numerous situations in which shareholder representation is a good thing. In a situation like this, however, the constant stream of legal reminders for shareholders to jump aboard the compensation train can disproportionately impact market sentiment. Whatever the outcome of these cases, and we suspect it is unlikely to fall in favor of the shareholders this time, this disproportionate impact reinforces a thesis we discussed in our previous coverage of Anthera. Further, it looks as though recent action is representative of the beginnings of a shift in sentiment, and that our thesis might be starting to come to fruition.Before we get into the details of what we're looking at, here is a quick introduction to the situation. Basically, this company was developing a drug targeting a cystic fibrosis related complication. We won't get into the science of it all in this piece, as it is something we looked at in quite a lot of detail in our previous coverage. What we will say, however, is that the trial didn't produce the data the company wanted, and markets sold off to the tune of 65% when the news hit press.We pointed out at the time that the selloff may not be justified, with our suggestion rooted in the fact that the drug's bad performance in the trial was due to a poor trial design, as opposed to anything science related. In turn, and as reinforced by suggestions made by management at the time of the negative release, we thought that a redesign, and a subsequent trial revisit, could rectify the situation.Sure, it would cost money, and sure, the necessity to meet this cost would likely induce some degree of dilution, but we pointed out that this wasn’t prohibitive to a recovery of the lost market cap. Additionally, we pointed out that – if the drug performed as expected in a fresh trial – Anthera would gain value above and beyond the point from which it declined back in December.The lawsuits that are surrounding the company right now, when you look at them a little more closely than just the headlines, seem to reinforce this thesis. The crux of these companies' arguments is that Anthera messed up the trial design:

"…there were dosing problems inherent in the Solution Study design that created challenges to obtaining responses."

So, where do things stand now?Well, our thesis hasn't changed, and the above quote (taken directly from one of the above-mentioned companies press releases) lends credence to both our thesis and Anthera's claim that a redesign should fix the issue. We remain bullish on the company, and we expect the gap to close and more once a fresh trial initiates. The company gained nearly 10% this week, and it looks as though wider markets are starting to build a position at the current discount, ahead of our predicted recovery. Again, dilutive capital necessity is something of a concern, but is not prohibitive to an exposure, especially given the company's current market capitalization.We will be updating our subscribers as soon as we know more. For the latest updates on ANTH, sign up below!Disclosure: We have no position in ANTH and have not been compensated for this article.

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