In a Nov. 19 research note, analyst David Bautz reported that Zacks Small-Cap Research initiated coverage on Avivagen Inc. (VIV:TSX.V; CHEXF:OTCMKTS) with a US$2.50 valuation. The stock is currently trading at around US$0.39.
Avivagen is developing a line of animal products that promote growth and immunological health through its proprietary oxidized-carotene (OxBC) content. Its products reduce or eliminate animals' need for antibiotics as a growth promoter. "Avivagen discovered that oxidized B-carotene (OxBC) contains a unique class of polymeric compounds that promote immunological health," Bautz highlighted.
"Avivagen and its partners has shown that supplementation of feed with parts-per-million levels of OxC-beta Livestock can be used as a replacement for growth-promoting antibiotics while offering the same or better growth and health benefits without contributing to the development of antibiotic resistant organisms," he commented.
Bautz pointed out another positive to the story, that the potential market for Avivagen's OxC-beta Livestock is "enormous," at about $1 billion. This estimate is derived from the fact that about 32,000 feed mills produce roughly 1.1 billion metric tons of feed every year, and the global feed market is forecast to hit roughly $37 billion in 2022.
Zacks' model on Avivagen estimates sales of OxC-beta Livestock to reach CA$50 million in 2024. OxBC is approved in the U.S., the Philippines, Mexico, Thailand, Taiwan, New Zealand and Australia.
Further, Avivagen continues to gain market share in Asia, its priority target, which accounts for 35% of the total amount of animal feed produced each year globally, Bautz noted. Avivagen has several distribution partners in Asia, where the registration process is underway in a number of countries there, including China.
Lastly, indicated Bautz, Avivagen has and is following a set growth strategy. One part is to maximize its existing partnerships "by driving adoption and increasing new applications." The second is to expand into new markets by getting approvals in additional countries. The third component is to make further distribution deals in approved markets.
As for potential competitors to Avivagen, Bautz wrote, "We were not able to uncover any other company that is developing technology similar to OxC-beta Livestock, however, there are a number of antibiotic alternative products that are available and could be considered competition to Avivagen and OxC-beta Livestock."
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