Will AVANIR Pharmaceuticals continue to trend higher?

By Patrick Crutcher

Tuesday, 02 November 2010 03:34

AVANIR Pharmaceuticals (NASDAQ:AVNR) notified shareholders Friday that it had received FDA approval of AVP-923, now known as NUEDEXTA.

As we told our premiun subscribers over the weekend, Friday was a very hectic trading day for investors who saw shares plunge to a low of $1.31 following a bear raid on the stock.

Those lucky enough to double-down at these bargain prices under $2, stood to make a very good profit tomorrow. The high short interest in AVNR(~10-12M) could potentially cause a nice short squeeze. Most brokers currently don’t have any available shares to short on AVNR. We wouldn't be surprised if this trends higher.

AVNR received FDA approval for NUEDEXTA (dextromethorphan hydrobromide and quinidine sulfate), which is indicated for the treatment of pseudobulbar affect (PBA). PBA is a neurologic condition characterized by involuntary, unpredictable and disruptive outbursts of laughing or crying in patients with certain underlying neurologic diseases or injuries. We should note that the FDA approved only the 20/10mg formulation, not the 30/10mg. Additionally, there was no patient populations restrictions to MS or ALS patients only. Now that NUEDEXTA is approved, it also has the potential to be used off-label for diabetic peripheral neuropathy pain. This is a future indication AVNR will eventually be pursuing. Off-label use is likely to be negligible given that Medicare or insurance will not likely cover it. Ideally, AVNR will discuss the pricing for NUEDEXTA so that investors can begin modelling future revenue.

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

For sales of NUEDEXTA to reach some analyst’s estimates, AVNR will certainly have to push sales/advertising and hope insurance will cover NUEDEXTA. More recently, AVNR has stated AVNR has already been looking to hire 60+ new employees in Sales & Marketing and the sales team is being lead by Michael McFadden. He has an impressive career with over 20 years of pharmaceutical commercialization experience, most recently at Amylin Pharmaceuticals(AMLN). His sales team was consistently recognized as one of the leading managed markets teams in the industry.

One thing to keep in mind is that AVNR has a $75M shelf offering waiting to eventually be exercised; this shelf was made effective on October 28th.

We hope some subscribers used our extensive research to make an informed decision on AVNR. We felt the SPA provided AVNR with less regulatory risk and that they would be approved based on the safety/efficacy data available. We initially began in-depth coverage of AVNR starting back in July. Good luck trading out there!

Disclosure: Long AVNR

Initial Coverage - http://biomedreports.com/2010070746667/investors-warming-up-to-avnr.html

Recent Q&A about safety data - http://biomedreports.com/2010101958490/safety-data-explained-for-upcoming-fda-decision.html

AVNR Announces FDA Approval of NUEDEXTA - http://bit.ly/df686Y

NUEDEXTA FDA Approval Conference Call Webcast - http://bit.ly/bPEDHI

"Featured Content" profiles are meant to provide awareness of these companies to investors in the small-cap and growth equity community and should not in any way come across as a recommendation to buy, sell or hold these securities. BiomedReports is not paid or compensated by newswires to disseminate or report news and developments about publicly traded companies, but may from time to time receive compensation for advertising, data, analytics and investor relation services from various entities and firms. Full disclosures should be read in the 'About Us Section'.

Add this page to your favorite Social Bookmarking websites

blog comments powered by Disqus

Newsletter