|Repros Sees Renewed Confidence|
|By Brian Wilson, Contributor|
|Friday, 07 September 2012 07:09|
Repros Therapeutics (NASDAQ: RPRX) stock has rallied an impressive 60% in the last month on renewed confidence in the company's pipeline, which consists of the male fertility drug Androxal which inhibits estrogen receptors, and the female endometriosis and uterine fibroid treatment Proellex, which inhibits progesterone.
Androxal has also made progress, and expects to submit an NDA by 2014 under a recently granted SPA (Special Protocol Assessment) which allows Repros to potentially receive an FDA approval before the completion of its phase III trials for Androxal.
The market is trading Repros at a market cap of approximately $220 million, the bulk of which depends on a successful launch of Androxal. In order to raise more money (which was completely necessary given that Repros only had $10 million in cash as of June 30th) the company sold $23.6 million worth of unregistered shares at $11 apiece on September 4th. If the company can manage its low budget (of about $3.1 million per quarter), they will have just enough cash to bring Androxal to market if it is approved on the first NDA submission. Judging by the strength of this recent rally, investors are quite confident that Androxal is going to be well worth the trouble.
Androxal's phase III study is testing 12.5 mg and 25 mg Androxal against topical testosterone and a placebo, although this doesn't address a major obstacle. Androxal (enclomiphene) has to take from the sales of generic compound clomiphene, which contains enclomiphene and another isomer called zuclomiphene. Androxal can't compete with generics on pricing, but it has an advantage with medical data. I was pointed towards medical literature that suggests that zuclomiphene is somewhat more estrogenic than enclomiphene (which makes Androxal more effective at boosting testosterone given its dosage), but it's still questionable whether or not this detail would be enough to differentiate Androxal.
If you are looking to chase the rally in Repros for the long run, I would focus exclusively on Androxal as the bulk of the company's intrinsic value due to the unpleasant history surrounding Proellex and it's mechanism. Bears interested in betting against the recent relief rally may want to wait for short interest to die down, since it's presumed that a significant number of the 2 million shares shorting RPRX are trapped under the stock's recent rise above $15/share.