This article (from Tues) is similar in content to some others...

This article (from Tues) is similar in content to some others recently posted (ie same brokers quoted), but it is nice to see more support coming forward for Avexa.

Article:

Ferret doesn't always pick winners and has been disappointed with the performance of Avexa Ltd (ASX:AVX) over the last six months when the shares dipped from 55c in mid January to 29c yesterday.

He pleads guilty to not taking into account market uncertainty and those who lost confidence that some of the company's research was likely to fail.

But biotech analyst Tanya Solomon from ABN AMRO Morgans has never wavered in her conviction that Avexa will win out in the longer term.

She has recommended the stock as a buy with a target price of 92c.

Ms Solomon says the current share price implies only a 20 per cent probability of success that AVX will successfully deliver ATC (HIV AIDS drug) to the market.

Given the clinical data reported to date, a Phase III program underway, and a partnership deal on the horizon, ABN AMRO Morgans reiterates its Buy call.

Ms Solomon says the current share price wrongly attributes little chance of success, and that ABN AMRO Morgans has used a probability of success of 80 per cent.

Given that every HIV compound to enter Phase III clinical trials to date has been successfully commercialised, ABN AMRO Morgans considers the current share price an exciting entry point.

Each 1 per cent change in the probability of success alters its valuation by 2c per share.

With no changes to its forecasts, ABN AMRO Morgans's valuation is unchanged at $1.32 (risk free rate of 6.25 per cent, WACC of 15.7 per cent and a terminal growth rate of 1.5 per cent), Ms Solomon declares.

Given the current volatility in the market, ABN AMRO Morgans has applied a 30 per cent discount to its valuation and has set the price target at 92c.

The downside risk to its price target includes delays in the progress of the Phase III trial.

Recruitment for Phase III clinical trials are on track, and since starting in December, the first of two Phase III trials has progressed well, with about 40 centres having opened across North America, Israel, Europe and Australia.

Given the increased rate of expenditure by the company (operating cash outflow of $9.3m vs $3.9m for the previous corresponding period), ABN AMRO Morgans believe the rate of recruitment is strong, with Avexa on track to finish recruitment by the third quarter of calendar 2008 and release the initial data in the first quarter of 2009.

Securing a partner before the end of 2008 is a key catalyst to watch for.

As at March, Avexa had $53.4m in cash and has confirmed its intention to look for a partner to supply additional capital and marketing expertise.

While at this stage it is still too early to tell what form this may take, in its model ABN AMRO Morgans assumes that the potential partner will license ATC from Avexa in return for a royalty and funding assistance for the Phase III trial.

It is also expected that the appointment of a marketing partner may speed the time to file a New Drug Application (NDA) and ultimately assist with marketing of the drug.

ABN AMRO Morgans believes the successful negotiation of a partnership deal will be an important share-price catalyst.

Although it is difficult to predict the timing of this, the company has confirmed its December year-end target.

SHARE PRICE MOVEMENTS

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Shares of Avexa yesterday eased 1c to 28c. Rolling high for the year is 84c and low 27.5c. The company has $115.7 million shares on issue with a market cap $113.6 million.

In the chairman's letter to shareholders in March, Dr Hugh Niall (since retired) said Avexa had also recently entered into a collaboration agreement with Monogram Biosciences, based in San Francisco and a world leader in testing resistance to drug therapies.

This will make a valuable contribution to Avexa's discovery and development programs, including the Phase III clinical trials now under way.

The Avexa management team remains actively involved in a variety of HIV/AIDS forums.

Key personnel regularly participate in major conferences around the world, and have presented at several.

In addition to ensuring that the latest insights into pharmaceutical development are brought to bear on the company's programs, this is also important in building awareness of the company's objectives - for ATC in particular - and to maintain the international network of contacts which is invaluable in successful pharmaceutical development, Dr Niall told shareholders.

"Finally, it is difficult for all of us, as shareholders, not to be distracted and concerned about the turmoil in global sharemarkets in recent months and to worry about the impact on Avexa (and, for that matter, on other companies in which we may have an interest)."

"But while markets usually eventually recover people who are infected with HIV/AIDS still have it and have it for life.

"They still inevitably develop resistance to their existing drug therapies and they still badly need drugs like ATC," the chairman said.

"It remains our mission to press forward, using all the technical and financial resources we can access, to bring ATC successfully to market for the benefit of both our shareholders and those suffering from the scourge of HIV/AIDS."

Dr Niall retired as chairman in late March, and non-executive director Stephen Cooper has assumed the role of chairman pending a search for a new Board member to assume the role.

Mr Cooper has been a director of Avexa since November 2005. He is a director of Grant Samuel, a leading independent Australian advisory firm and has wide ranging experience in mergers and acquisitions, corporate restructuring and capital raisings.

BACKGROUND

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Avexa was formed in 2004 and a drug-discovery company based in Melbourne.

Avexa's business is the discovery and development of anti-infective pharmaceutical medicines for the treatment of serious human infectious diseases.

Its principal research programs focus on the discovery of innovative medicines for the treatment of the diseases caused by Human Immunodeficiency Virus (HIV), and ancomycin- and methicillin-resistant bacteria.

Each of these programs represents an area of significant medical need and high market potential and is designed to discover and develop innovative compounds which have a competitive edge.