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Biotech / Medical : AVIGEN(avgn)
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To: adam hefian who wrote (75)8/29/1997 1:08:00 AM
From: Czechsinthemail   of 228
 
adam,

I'd say you spelled out the half-empty view pretty well. The other side of the story is that AVGN is priced extremely cheap relative to its cash on hand and its patents/proprietary technology. It's not clear whether they haven't had success in finding a partner or whether they have been carrying their research further before signing a deal. The better-looking their research is, the better the deal they can negotiate.

We are still waiting on Avigen's earnings announcement, which should come soon. I think that is likely to be an occasion for some kind of news that will buoy the stock--progress on their research or perhaps some kind of announcement about partnering. Since we already know they will report a loss for the quarter, there is no news there. The news in the announcement will be the positive surprise.

Looking at the stock from a risk/reward perspective, if you buy it here you get better than a 50% return if it simply returns to where it was trading in the spring. The slow decline in AVGN's price has built a lot of negativity into the situation, which more than anything has contributed to the further declines as people bail out. But from a value perspective, this is the kind of situation that should have you salivating. Take a look at the balance sheet and you realize someone could buy this company and not have to fork over very much to get it. Remember that while some people are selling as the price declines, others are buying shares in anticipation of making a bunch by holding them.

I just hope that AVGN will be around by the end of the year.

If it isn't, it will be because we've been bought out.

Baird
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