Avivagen is reviewing “strategic alternatives” that could include selling the embattled Ottawa-based life sciences company as it struggles to gain market traction for its natural immune-boosting compound.
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Avivagen is reviewing “strategic alternatives” that could include selling the embattled Ottawa-based life sciences company as it struggles to gain market traction for its natural immune-boosting compound.
The firm, which is listed on the TSX Venture Exchange, announced Thursday it has appointed a special committee of its board of directors to “review and assess strategic alternatives for the company to maximize shareholder value going forward.”
Avivagen shares were trading at just one and a half cents on the TSX-V on Thursday afternoon. The firm’s stock price has fallen 19 cents over the past 12 months.
In a news release, Avivagen said the options could include selling part or all of the company.
In the meantime, the firm has reduced its head count and “suspended or terminated” some of its consulting arrangements in Asia and Mexico in an effort to cut costs.
In Avivagen’s last staffing update about a year ago, chief executive Kym Anthony said the company employed 18 people.
Anthony was not quoted in the news release announcing the strategic review. He did not respond to a message from OBJ on Thursday.
The move comes less than three months after Avivagen announced in late February that it was seeking a new CEO to spearhead its global marketing push.
At the time, Anthony said the company was “implementing various initiatives to accelerate growth” that would include hiring a new chief executive to oversee its scaleup efforts.
“The board and I remain deeply optimistic about the opportunity for Avivagen and its shareholders, and we believe that the next CEO will have all the tools and relationships in place to expedite a rapid ramp in growth,” he said in the news release from Feb. 21.
Exploring a possible sale is Avivagen’s latest attempt to solidify its financial position after years of racking up heavy losses.
The company, which specializes in supplements aimed at replacing antibiotics in cattle and pig feed, posted a net loss of $6.1 million on revenues of $939,000 last year. In the first three months of fiscal 2023, Avivagen lost nearly $1.2 million on sales of just $66,000, raising its total accumulated deficit since it was founded in 2005 to $46.3 million.
The company says it’s conducted dozens of tests that prove the natural antioxidants boost the immune systems of livestock, helping to ward off disease without the use of antibiotics – a key selling point at a time when health experts are calling the rise of antibiotic-resistant “superbugs” a simmering global health crisis.
Avivagen now sells its products in 10 countries, including Australia, the United States and Mexico. Last year, the company got the green light to launch large-scale trials of its products in China, the world’s largest market for commercial animal feed – a development Anthony predicted would translate into “quite significant revenues” for Avivagen in the long term.
But the addition of China hasn’t boosted the company’s flagging sales. Avivagen’s net revenues in the first quarter of 2023 fell 75 per cent from a year earlier, mainly due to lower sales of its flagship OxC-beta supplement.
In financial documents filed in March, management warned that Avivagen “may never be able to successfully develop commercially viable products” in the heavily regulated animal feed industry.
“Whether and when the corporation can attain profitability and positive cash flow is very uncertain,” the documents said, adding that unless the company can raise additional capital, there is “significant doubt” about its ability “to continue as a going concern.”
Avivagen said in March its efforts to gain regulatory approval for its products face ongoing hurdles. The company noted that it “can take many years to receive regulatory approvals in multiple countries,” adding there is a “significant degree of uncertainty” as to whether it will gain access to more markets.
Avivagen said it is working to gain approval for OxC-beta in other countries, including Costa Rica, Peru, Colombia, Argentina and Uruguay.
The company, which raised an additional $8.5 million in equity and debt financing in fiscal 2022, said it has hired consultants in those markets to help “expedite the approval process.”
Avivagen said the costs of attaining those approvals are piling up. The company added that even products that face fewer regulatory hurdles, such as its antibiotic-free supplements for pets and humans, “need marketing resources and an effective marketing campaign to attain commercial success.”
