Animal Feed Company Evaluating Strategic Alternatives

Avivagen Inc. (VIV:TSX.V; VIVXF:OTCQB) is considering strategic alternatives to maximize stakeholder values, including the sale in part or whole of the company and reducing staff and consulting arrangements. Avivagen's flagship product is OxC-beta, a supplement that has been found to provide nutritional benefits to humans and livestock through numerous peer-reviewed studies.

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Avivagen Inc. appointed a special committee to consider strategic alternatives to maximize stakeholder value in the future. Among other possibilities, the committee will consider the whole or partial sale of the company. As part of the process, the company has reduced staff and terminated some consulting arrangements in Asia and Mexico as cost-cutting measures.

According to analyst Clive Maund, Avivagen is an excellent choice for investors. 

Avivagen's flagship product is OxC-beta, which offers health and nutrition benefits in three major market verticals: livestock, companion animals, and human health supplements.

The chemical composition of OxC-beta and its mode of action is well understood and has been supported by six peer-reviewed publications. Its potential for improving productivity in the livestock industry is supported by over 100 clinical and field trials and eight peer-reviewed publications. OxC-beta is protected by a strong patent portfolio that consists of seven patent families.

OxC-beta is approved for use in animal feed in Taiwan, the Phillippines, Thailand, Malaysia, Vietnam, Australia, China, Mexico, and Brazil and generally regarded as safe in the United States. It has been used in feed for over 46.6 million livestock, 133,820 dogs, and has been given to 4,000 people.

The company will continue to provide updates on the strategic review process through press releases.

Why Supplements?

There are a number of governments that promote the production of animal feed, including the United Nations Development Programme, and the state government of Michigan.

According to the National Animal Supplement Council, Avivagen's product meets its quality standards and passed an independent audit of its facilities, and as a result, the organization has permitted the company to display its Quality Seal.

Additionally, Avivagen's products have applications in pet feed. Pet food and livestock feed are repeat purchases that occur at regular intervals, which, according to Motley Fool, "gives pet food companies both a reliable revenue stream and loyal customers who are reluctant to switch their animals' diet.

Additionally, pet food is a recession-proof sector; sales of pet products actually rose during the 2008 financial crisis and the early stages of the pandemic." Pet food, but not livestock feed, is also propped up by factors related to the humanization of cats and dogs, with consumers willing to spend on related products that provide the comfort of their animals. Other companies in the pet industry, such as Chewy and Freshpet, have done extremely well throughout the pandemic and current recession fears.

Catalysts

According to analyst Clive Maund, Avivagen is an excellent choice for investors. According to Maund, "Avivagen Inc.'s stock has been sold down to an extraordinary degree as we can see on its latest 20-year chart . . . the conclusion is that, whilst we may have to bide our time a little waiting for the remaining tranches of the funding to be taken up, the price at which this funding has been set seems to have forced the stock price down to an artificially low level."

Maund believes the reason for the temporary low price is that the company was in the middle of a funding exercise, where the issue price was 20 cents.

According to the National Animal Supplement Council, Avivagen's product meets its quality standards and passed an independent audit of its facilities, and as a result, the organization has permitted the company to display its Quality Seal. Avivagen's product aims to replace antibiotics and growth hormones by promoting general health and wellness.

Avivagen has a strong patent portfolio for OxC-beta, and it is widely accepted in over ten countries as safe for animal and human consumption. The product has also been validated by several peer-reviewed studies and clinical trials.

Ownership and Share Structure

Management and insiders own approximately 1.11% of the company. Kym G. F. Anthony owns 0.59% with 0.46 million shares outstanding, Graham Burton owns 0.40% with 0.31 million shares, Jeffrey J. Kraws owns 0.06% with 0.05 million shares, David Hankinson owns 0.03% with 0.02 million shares, and Paul Mesburis owns 0.03% with 0.02 million shares.

The rest of the company is held by retail investors.

Avivagen Inc. has a market cap of CA$0.87 million. There are 77.69 million shares outstanding and 76.83 million free-float traded shares. They trade in the 52-week period between CA$0.01 and CA$0.22.

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