Sunday, December 18, 2005

Vaxgen: The Anthrax Killer

Pay attention because we're only going to do this once: today we're going to recommend an OTC stock.

Meet Vaxgen (VXGN), a biotech focused on the development and commercialization of biologic products for the prevention/treatment of human infectious diseases.

Founded in 1995, VaxGen’s business strategy emphasizes the prevention of potential bioterrorism threats, specifically anthrax and smallpox.

That's the good news.

The bad news is that Vaxgen hasn't made a dime since 2003, and what they made that year was chicken feed.

So why do we like Vaxgen?

On November 4, 2004 the U.S. government forked over $877 million to Vaxgen so they could produce the world's first anthrax cure.

We believe Vaxgen will be taken over as soon it gets closer to bringing something to market.

As to when that will be, no one knows.

But M&A activity in the biotech sector is running rampant, as we saw this week when Abgenenix (ABGX) was snapped up by Amgen.

With highly liquid balance sheets and anemic pipelines, it should come as no surprise that Big Pharma's in the mood to buy.

With so much cash in the coffers, large pharma can afford to take bigger risks.

And make no mistake: Vaxgen's a risk, or better yet, a lottery ticket.

Nevertheless, we're giving Vaxgen our vote of confidence, as have all 3 analysts that cover Vaxgen -- they each have a strong buy on the stock.

Count us in.

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