BST Trade Alert – April 24, 2015
Recommendation:
Buy POZEN ($NASD: POZN) up to $9.00 per share.
About the Company:
POZEN calls themselves a ‘progressive pharmaceutical company’.
They develop products to address unmet medical needs. They primarily develop drugs to treat pain and pain-related conditions by combining existing drug therapies that result in superior patient outcomes.
Many of POZN’s developments combine aspirin with other products in order to reduce gastrointestinal complication and more effectively treat things like arthritis, migraine headaches, and cardiovascular disease.
They call this their PA product platform. And they have successfully gained FDA approval for two self-invented products in a span of two years.
They also have a pipeline of similar drugs in development.
The company is very solid financially. They generated $32 million in licensing revenue over the last 12 months and realized $19.7 million in income during that time.
Right now, they have about $40 million in cash. They have enough cash to continue operations for at least two years without raising additional money.
About the Drug:
Their leading drug candidates are drugs from their PA platform containing a PPI and aspirin. They have completed clinical development testing in the United States.
PA32540 and PA8140 are essentially delayed release tablets of aspirin. They are developing it for secondary prevention of cardiovascular and cerebrovascular disease in patients at risk for gastric ulcers.
About the Market for This Drug:
Cardiovascular disease is the #1 killer of men and women.
There are volumes of data showing the effectiveness of low-dose aspirin as a therapeutic agent in treating cardiovascular disease.
Unfortunately, aspirin also causes stomach ulcers in some people.
Needless to say, developing an aspirin that has a lower occurrence of stomach ulcers is a multi-billion dollar market.
About the Potential Catalyst:
POZN has completed their testing for PA32540 and PA8140 and submitted an NDA to the FDA in January of 2014. Since then, the FDA has declined to approve the drug twice.
Both times they received a CRL from the FDA indicating questions remain that prevented the approval of the NDA.
Here’s where it gets interesting…
There were no clinical or safety deficiencies noted with respect to either PA8140 or PA32540. The reason the NDA wasn’t approved was due to an inspection of the manufacturing facility of an active ingredient supplier.
In other words, this drug with a multi-billion dollar market will likely be approved once their supplier gets their issues figured out.
About the Shares:
POZN is currently trading for $8.50. The stock is up 41.7% from the 52-week low. And it’s currently 13.2% below the 52-week high.
The stock has been range bound between $6.50 and $9.50 over the last few years. This isn’t surprising given the difficulty they have had gaining regulatory approval.
Needless to say, if POZN gains approval for this drug, we think the stock will break out of this range and catapult higher.
Key Facts:
Company: POZEN
Ticker: POZN
Recent Price: $8.50
Market Cap: $268 million
Average Daily Volume: 203K shares
Chart:
Category: BST Trade Alert
