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Surveying the landscape of biopharmaceutical firms for profit opportunities drives many investors to look for catalyst opportunities. No magic bullet there: invest, wait for a catalyst, hope it's positive and an uptick occurs-- and sell, subsequently for short term profit. Sometimes they profit, other times not. But for investors looking to companies who are building long-term value, this is not the modus operandi. Long-term means company building, product building with validation, stability in management and stability in financials, particularly cash-- that keeps the lights on and the building of long-term value moving forward. This requires patience.

An updated look at Trius shows some good characteristics of a long play, one in which value is being built and stability is apparent, with the benefit of catalyst opportunities as well. In terms of cash, the company reported roughly $71 million on hand in its 9-30-2012 report, nearly the same on hand at the same period last year. The company's balance sheet shows a lot of fiscal discipline in this area. Not many firms of this size have a year of capital tucked away.

Most likely, an additional round of financing is to be expected in the future, this to support growth and commercialization of its lead product Tedizolid Phosphate. The company is expected to complete enrollment of its second phase 3 study this year, likely in the next four to six weeks, but the top line data won't be out until the end of Q1, 2013. There should not be any surprises here as the company already has phase 3 data from the first study, a very positive note.

This drug is going to happen, that's pretty much the consensus at this point by close watchers. Commercialization expenses will indeed be looming. This is a reality. Plans and financing leading towards commercializing have been underway, led by astute management. Part of this was the company's effort to secure a $25 million committed equity financing facility with Terrapin Opportunity, L.P. earlier this year. There is a well thought out, well-planned effort underway that should lead to a successful outcome for value building with this product and with the company. This is long-term value in the making.

Looking at some operational numbers for its last quarter, it's important to understand that the company's $39.7 million loss is attributed to expenses associated with not just only the Tedizolid trial expenses, but upwards of 10 phase 1 studies as well. So, all of those are not only for the NDA filing, but for product differentiation.

The future for the type of remedies that Trius is developing looks promising, due to problematic issues in medicine and an improved regulatory environment. There is a continued increase in multidrug-resistant bacterial pathogens, both gram positive and gram negative. The gram positives are addressed by the Tedizolid elite program and gram negatives by the earlier stage program, the Gyrase program, which the company expects to put in to clinic in 2013.

The regulatory environment is improving as well. The GAIN act is significant and a very positive factor for Trius, as well as for other firms in the U.S. Historically, there is a negative perception by investors that the FDA has been an obstacle. Company management reports that a much more positive situation actually exists there. Things have changed fundamentally at the FDA, and the FDA is actually actively encouraging sponsors to propose creative clinical trial designs to help them get their anti-infective products to the market faster and in a less expensive manner. The company's lung study falls into this area, with an end of phase 2 meeting scheduled in early December with the agency to discuss creative trial designs. Hopes are for an agreement that nets a revolutionary trial design that subsequently clears the path for quicker approval with less clinical costs as well. This is the behind the scenes maneuvers and capitulation of regulation that you want your company management to be pursuing and executing.

Outside opinions

Rating firms in October projected positive news consisting of a "buy" rating by WBB securities (at a $7.00 share target) and a Zack's report projecting $12.00 a share escalation. Upcoming years 2013 and 2014 should deliver plenty of catalyst opportunities as well for this company that an investor could benefit from, while others decide to watch the long-term value unfold before their eyes on a gradual and steady basis. Trius is currently trading at $4.75 , the bottom end of its 52wk range of 4.66-7.46 and a market cap of $187 million.

Source: Trius Therapeutics: A Long, Stable, And Steady Play