US talks blamed for Avantogen price dip

Stalled negotiations relating to Avantogen's (ASX:ACU) US$3 million instalment in its $5 million bid to acquire US vaccine developer Regalen, formerly Galenica Pharmaceuticals, may have caused its share price to slide from $0.19 on August 24 to $0.14 on August 31, the company said today in response to an ASX query.

The company also told the ASX that its operating loss before abnormal items and income tax for 2004-05 was likely to be 30 per cent greater than last financial year. This was due to an increase in operating expenses over the past 12 months and included an amortisation charge of $1.5 million relating to the acquisition of assets from Galenica Pharmaceuticals.

Avantogen, formerly Australian Cancer Technologies, agreed to purchase Regalen in July 2004 for around US$5 million in shares. Regalen had developed proprietary technology in immune enhancers, carriers and antigens, which can be used as standalone therapeutics or as a vaccine component.

Under the terms of the acquisition, Avantogen, through its wholly-owned US subsidiary Adjuvantys, issued almost 2 million shares at $0.48 and paid an additional US$350,000 upon closing in July last year. A further US$3 million was to be paid in July 2005 (12 months after the acquisition), and $1 million after 24 months, in shares or cash at Avantogen's option.

"We are in the process of negotiating this agreement, obviously details are confidential," said Avantogen chairman Richard Opara. "There are a number of possibilities that we're trying to negotiate for the best interest of the shareholders of the company, and that has to be acceptable to the vendors."

Avantogen's shares were trading at AUD$0.145 at the time of writing, up $0.005 since trading opened today.