Small-Cap Pharmaceuticals
May 8th, 2007 | By Greg Guenthner | Category: Penny stocksIn the world of penny stocks, things can turn around for some companies rather quickly. In fact, some companies perform much better in the short term than you would expect.
And when I wrote to you at the end of March on the prospects of Inspire Pharmaceuticals (ISPH: NASDAQ), I was expecting the company take many months to get on the right track. This isn’t a stock to pick if you’re only willing to settle for fast gains, I wrote.
I was wrong.
Inspire closed at $5.65 just two days after the column was published. Today, the stock trades for about $7.50. That is nearly a 35% gain in six weeks.
It looks like one of our possible scenarios did in fact come true. In our first scenario, we discussed whether Inspire’s late-stage drugs would be able to pass additional FDA scrutiny.
Result: Inspire is back on track sooner rather than later, and its share price soared. Shares of Inspire climbed to a new 52-week high late last month on news that its eye infection treatment was approved and will be launched later this year. The new medication could bring in between $30 million and $45 million for the company.
Here’s the result:
Source: BigCharts.com
This is quite the development for a company that has been losing money for so long. And there is more potential good news, as well.
One of the company’s most promising candidates is a yet-unnamed drug aimed to treat cystic fibrosis patients. Cystic fibrosis, or CF, is a hereditary disease that causes lung and pancreas problems, eventually causing disability and early death.
Inspire’s CF candidate is currently in Phase 3 clinical trials and has been granted orphan drug status. This designation is handed down by the FDA to encourage the development of drugs for rare (or “orphan”) diseases affecting less than 200,000 people in the United States.
Orphan drugs have relatively small demand, so the FDA grants companies that produce them some perks. If Inspire’s new CF drug is granted approval, the company will have seven years to exclusively market the drug. That’s seven years and millions of dollars that no one else will be allowed to touch.
Another new drug in the works at Inspire is called Bilastine, an allergy drug comparable to Pfizer’s popular drug Zyrtec. Inspire bought the rights to develop Bilastine from Faes Farma, presumably to compliment other allergy medications in its portfolio.
Currently, Inspire markets along with the company Allergan two drugs that treat dry-eye and allergies. Inspire’s own dry-eye drug — called Prolacria — is still waiting for approval from the FDA.
And as we have written before, the company has enough cash to carry it through a couple more years, and very little debt. This adds up to a bright future for Inspire…an added bonus to this quicker than expected recovery.
Best,
Gunner
May 8, 2007
P.S.: We’re on our eighth year of hosting the Agora Financial Investment Symposium, and it just gets better and better. If you attended last year, you’ll remember the over 30 unique stock picks you took back home.
Some of the speakers will be the same at this year’s Symposium…and the stock picks equally as profitable. But we’ve added a few other heavyweights to the speaker list.
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