Obviously, these industry leaders know how to make money. Pfizer’s annual revenue works out to 47% of its total market cap. The annual revenues for Merck and GSK come out to 36.9% and 23.9% of their market caps, respectively…

But believe it or not, there’s a much smaller company that can top the numbers of even the biggest drug giant. It’s a penny stock pharma play with a market cap that doesn’t even approach $100 million. We don’t think it’ll stay this way for long, considering the company just signed a commercialization agreement worth more than its entire market capitalization.

You simply won’t come across a deeply discounted pharma stock such as this very often. The market has managed to overlook quite a gift…

In 2007, the value of the global pharmaceutical pain relief market was approximately $31 billion. In the United States, two-thirds of the dollar volume of the prescription pain medication market is for drugs used to treat chronic pain, with the remainder going toward drugs used for acute pain.

The company designs products to fulfill unmet and underserved medical needs in the pain-management niche. The company is particularly focused on breakthrough cancer, post-operative, back, orthopedic injury and burn pains. Despite the advances in medicine, the company insists treatments for these types of pain continue to be an underserved medical need.

But that’s not even the main reason we think you should be excited about this company… You see, The company penned an agreement in January worth up to $71 million that includes double-digit royalties on future sales of its new pain drug once it wins approval.

Out of the $71 million, the company collects $12 million in upfront cash payments from a European pharmaceutical developer for the commercialization rights to its flagship product.

A company like this is precisely what you should look for when dealing with small pharma and biotechnology firms. In this case, we have a leading drug candidate in Phase 3 clinical development here in the U.S. The drug has been proven to work better and faster than its main competitor.

These are several strong indications that we’re dealing with a company with a huge potential for success this year– no matter what the markets do.

Sincerely,
Jim Nelson

February 20, 2009

How One Tiny Drug Developer Could Take Down Pfizer and Co. was originally featured in the Penny Sleuth.