WARNING About AVN!!! -- Stock Picks

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Date Posted: 08:13:51 07/03/05 Sun
Author: Stay Away From This One
Subject: WARNING About AVN!!!

Avanir Pharmaceuticals is a small pharmaceutical company. Their major cash generator was a product called Abreva which is a cold sore medicine whose commercial rights were given away to generate quick, short term cash. Literally a one trick pony with no more tricks.
The company has a history of about 11 years of reporting negative EPS. The last reported EPS was missed by 75% or -0.14 cents. The EPS for the next several years is predicted to be negative.
It's stock price has consistenly lived under $3 for several years. This microcap's outstanding shares is 107 MM and Market Cap of 305 MM which is artifically high, about 3 to 5 times higher than normal. These numbers are as large as a some moderate to large pharma companies. It is thought the company keeps issuing more and more stock to generate revenue (currently their major source of revenue) and gain a spot on the Russell index, however this type of financial trickery only hurts the shareholders by diluting the company's stock. Another kick in the teeth to shareholders is that the Proxy entitles the Board of Directors to enact a reverse split at any time. If the company enacts a 5 for 1 reverse split and then issues more stock as a Private Placement or Shelf Registration to generate more revenue, this will leave the existing shareholders with almost worthless stock.
Interestingly, the former CEO suddenly quit just before his pet project was about to be decided on by the FDA. He spent about 6 years on this project and with only half a year to go, he quits. This suggests that something is not right with the company.
Recently the New York Times wrote an scathing article about this company, the author ANDREW POLLACK whose article was published on May 9, 2005, Titled: "Is it a drug in search of a disease, or simply an affliction in need of better publicity?" The article questions the ethical nature of this drug company. Apparently they redefined a medical condition and reclassified it as a disease just to market their drug, which is currently under FDA review. The company renamed the condition as "Psuedobulbar Affect" or emotional liability which is the inappropriate outburst of emotion such as crying or laughing. This is a side effect for diseases such as MS, ALS and a result of some brain injuries. The article interviewed some experts in the field and they question the need for a drug that masks serious conditions and that many patients suffering from PBA do not ask for treatment.

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