Greenbackd

Avigen, Inc. (NASDAQ:AVGN) announced on Thursday that it had sold its rights to an early-stage blood coagulation compound for $7M. We have not been able to confirm that the sale was for cash. Assuming that it was, we estimate that it adds $0.24 per share to AVGN’s cash position and takes its net cash value to $1.46 per share, some 122% higher than its close Friday at $0.658.

We’ve been following AVGN (see earlier posts here and here) because it’s a net cash stock (i.e. it’s trading at less than the value of its cash after deducting all liabilities) and it has a specialist biotechnology activist fund Biotechnology Value Fund (BVF) pushing it to liquidate and return its cash to shareholders. In our initial post,we noted that AVGN’s net cash position was $36.5M. Assuming that the $7M sale was for cash, adding it to AVGN’s cash position gives it a net cash value we estimate at $43.5M or $1.46 per share, 122% higher than its Friday close.

If BVF is able to cause the company to quickly distribute its remaining cash to stockholders, AVGN is an attractive investment opportunity. The risk is that BVF is unable to persuade the company to do so before AVGN dissipates its remaining cash.

AVGN closed Friday at $0.658.

The S&P 500 Index closed Friday at 887.88.

[Disclosure: We do not presently have a holding in AVGN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only.]