AVI BioPharma Inks Another Government Deal Print E-mail
By Vinny Cassano   
Thursday, 10 June 2010 03:00

AVI BioPharma, Inc. (NasdaqGM: AVII) is back on the radar of late after releasing some positive news reports. On Monday morning Avi announced that it had landed a government contract with the U.S.

Defense Threat Reduction Agency (DTRA) for the development of AVI-7100 (formerly identified as AVI-7367) as a medical countermeasure to a possible H1N1 virus pandemic outbreak. The contract could be worth up to $18 million. Just two months earlier AVI had announced a similar agreement with the DTRA, with that contract being worth up to $4 million.


Last week Avi also announced the positive results of a Phase 1b-2 clinical study for the company's drug treatment for Duchenne muscular dystrophy (DMD). The study included 28 patients and was well tolerated by all, according to reports issued by the company.

This slew of good news for Avi follows a mid- April shakeup of company management that included the dismissal of then-CEO Leslie Hudson. Changes to the board of directors were also made, all the result of an agreement between the company and a shareholder group.

Earlier stages of the Avi pipeline include treatments for the Marburg and Ebola virus. Early studies of these treatments, tested on primates in collaboration with U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID), were encouraging and company is preparing to launch clinical trials on humans..... The recent press exposure and signing of new government contracts by the company would definitely make Avi a tempting long term pick, but I'm still reserving judgement on this one after years of having followed the stock and using it as a trading platform from time to time.

I think that first and foremost Avi is a prime example of how a small company with an 'in' in Washington can survive by hyping the latest viral threat and the lure of attracting government money. I say this because AVII traded for around nine dollars during the Bird Flu hype and the company pulled the same routine again on the Swine Flu hype, only this time prospective shareholders are not as impressed and the stock has failed to climb significantly.

The long term potential is there for AVI, although the pipeline is still in the early stages of development and is years away from market. At some point I believe that Avi will need to land a major partner - one not housed in Washington - in order to boost its credibility and become a real player in the biopharmaceutical market. Until then I would expect sideways trading, with perhaps a speculative spike now and then, and more government money. After all, when Washington decides they have a connection to a contractor, then that contractor can milk taxpayer money for a long, long time.

The news has been decent for Avi BioPharma, but the pipeline is still a ways away from market and the only lifeline has come from Washington.

I'm still not sold on AVII, although I'm watching closely based on the potential of the company's RNA Therapeutics.

Disclosure: No position.

Vinny also authors the popular stock investing blog VFC's Stock House.

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