Focus Company: Avigen, Inc. (AVGN)
By: Bill Mathews - The CHEAP Investor - Date: February 19, 2005
The Company
Avigen is a development stage biotech that focuses on the development of pharmaceutical products for the treatment of serious and chronic hematological and neurological diseases. The Company has developed deoxyribonucleic acid-based (DNA-based) drug delivery technologies, including its gene-delivery platform based on adeno-associated virus vectors. Avigen is using its DNA-based drug delivery technologies to develop products designed to treat hematological and neurological diseases that are difficult to treat using conventional pharmaceutical drugs.
In May 2004, the Company made a strategic decision to discontinue its Phase I trial for Coagulin-B. It shifted those resources into product candidates that more closely align with its new mission. The Company will expand and pursue its research and development efforts on serious and life-threatening neurological disorders, including Parkinson's disease and chronic neuropathic pain.
Avigen's History in The Cheap Investor
In the past Avigen has been a profitable investment for our subscribers. We recommended it in our January 1998 issue at $2.25 and it exploded to a high in February 2000 of $89 or +3855%! In May 2003 we recommended the stock at $2.76 and it almost tripled to $7.98 in February 2004. With the stock hitting a new 52-week low of $2.89, we think it is time to recommend Avigen once again. One reason we like Avigen is there are only 20 million shares outstanding. Insiders own less than 1%, but institutions own almost 47% of those shares.
Balance Sheet
At year-end, Avigen had approximately $76 million in cash, cash equivalents, available-for-sale securities and restricted investments totaling just under $4 per share in cash. This compares with approximately $99 million at December 31, 2003.
We see the beginning of a move in biotech stocks and believe Avigen is positioned to take advantage. The only negative is the price is in a downward trend and we're not sure exactly when It will turn around.
Financial Results
As with any development stage stock, the Company has little revenues and large losses. For the year ended December 31, 2004, Avigen reported a net loss of $23.9 million, or $1.17 per share, compared with a net loss in 2003 of $25.8 million, or $1.28 per share. Avigen also reported revenue of $2,195,000 for 2004 compared with $463,000 in 2003. The increase was due primarily to the accelerated recognition of deferred revenue representing the remaining balance of the $2.5 million payment received from Bayer in the first quarter of 2003.
Kenneth Chahine, Ph.D., president and CEO, further commented, "In December of 2004, I reported that our clinical trial of AV201 for late stage Parkinson's disease had begun. We will continue to monitor this Phase I/II trial and hope to share clinical information when sufficient data have been developed."
Avigen's product development candidate, AV333 for the treatment of severe chronic pain, continues to progress through advanced preclinical testing. Chronic pain is a large, underserved market with no effective therapy. No new class of drugs for this condition has been approved in over a decade and the currently available drugs are mostly ineffective. AV333 has been shown to be effective in reliving chronic pain symptoms in a variety of animal models.
Conclusion
We think Avigen has the potential to move at least 50 to 100% over the next year. If biotech stocks get hot, it could move significantly higher.
General information
| Market | NASDAQ |
| Symbol | AVGN |
| Price | $2.87 |
| Contact: | Avigen Inc - 1301 Harbor Bay Parkway - Alameda, CA 94502 |
| Telephone | (510) 748-7150 |
| Website | www.avigen.com |
© Bill Mathews - The CHEAP Investor
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