Is Javelin Worth A Second Look? Print E-mail
By Nicholas DeCesare   
Monday, 19 October 2009 03:00

Much has transpired at Javelin Pharmaceuticals (AMEX:JAV) since I wrote about the company back in August.  Javelin is a specialty pharmaceutical company, which develops and commercializes products for the pain management market primarily in the United States and Europe.

Shortly after my article, Javelin moved over $2.00 on the hopes that their Phase III data on Ereska would be positive.  However, Javelin began their August 11th conference call by stating that the Ereska trial had not met its endpoint.  The randomized, multicenter, double-blind, 1:1 placebo-controlled study assessed the safety and analgesic efficacy of repeated doses of Ereska over 6 hours in 259 patients with acute moderate-to-severe pain following orthopedic surgery.  It yielded a P-value of 0.053, just missing the standard for statistical significance of 0.05 or less.  The stock tanked into the $1.35 range.

In the months of September and early October, the stock took off again, recovering back over $2.00, but now hovers around $1.55.  There are several reasons that Javelin is worthy of a second look and could have huge upside potential.  At the August 11th conference call, CEO Marty Driscoll clearly outlined the direction the company was headed and what great things may be ahead for Javelin.  First, Mr. Driscoll clearly stated that despite the P-value of Ereska missing its desired outcome, it was clear during the trial that Ereska worked.  He also stated that the FDA would look at the data and discuss their findings with Javelin.  More importantly, Mr. Driscoll believes that it is possibly once all the data is reviewed by Javelin, that Ereska results may in fact yield a different P-value.

But, Javelin’s real “jewel” is Dyloject.  In fact the company stated that they believe they will file their first ever NDA for Dyloject in the United States within the next few weeks.  Dyloject is used to treat post-operative pain and addresses an underserved medical need for safe and effective injectable NSAIDs (Non-steroidal anti-inflammatory drugs)in the hospital setting here in the United States.  It is already approved and marketed in Europe.  The potential here in the United States is for Dyloject to be a multi-million dollar drug.  Just how big Dyloject can be, is still up for debate.  However, high estimates put this blockbuster drug in the hundred millions within a year or two of approval here in the United States.  Of course, that brings up the most interesting part of the conference call with Mr. Driscoll.  He made it very clear that the “value drivers” for Javelin for the rest of the year would be: filing a high quality NDA for Dyloject and removing any financial overhang by completing a major strategic transaction.  When analysts asked Mr. Driscoll about the strategic partnership that Javelin was looking into, it became clear that Javelin was entertaining offers from other pharmaceutical companies to buy them outright. 

So, why the recent decline in stock price?  The simple answer is, impatient investors who waited a couple months since the August conference call and when no deal was made, sold their stock.  However, for the patient investor, Javelin may prove to be a huge payoff.  Mr. Driscoll made it very clear that Javelin was still on track to file their NDA this fall, and he also made it clear that “much was near at hand.”  When asked if discussions have moved past partnerships for Dyloject before the NDA is even filed, Mr. Driscoll stated that discussions with others have expanded well beyond Dyloject.  With such limited downside, an investment in Javelin Pharmaceuticals could be a huge payoff in the very near future.  If Mr. Driscoll is true to his word, Javelin may be filing their NDA very soon, partnering with bigger pharma, and possibly a solid acquisition target.  With 3 products in Phase III trials, no debt, and a small market cap, I believe an acquisition is exactly what is “near at hand.”

Disclosure: Long JAV

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