It is highly likely that in the tail end of March, or early days of April, that an uptick opportunity will surface with Trius Therapeutics (TSRX) in the form of the release of topline data on the second of two Phase III trials for the firm's tedizolid drug. Results for tedizolid are expected to be positive, as were the first trial. If that catalyst opportunity does not materialize, then the subsequent NDA filing in approximately July could be, of course followed by regulatory approval, another opportunity, sometime in 2014. All of these opportunities are predicated on positive top line data results.
What would follow would be the marketing-commercialization process and hard work in the trenches of gaining acceptance with the medical community; i.e., hospitals, physicians and the like, maneuvering through Medicare payment issues and battling competing companies and products such as Pfizer's (PFE) Zyvox, and Cubist (CBST) Cubicin.
There is likely room for sales and profit for multiple firms and drugs as the rise of infectious diseases is apparent, in particular, acute bacterial skin and skin structure infections (ABSSSI) which tedizolid addresses. It seems as though a month does not go by that news and health organizations are reporting on super bugs and how the existing set of antibiotic class drugs can no longer sufficiently stop them.
No guidance has been apparent for how tedizolid will be marketed in the U.S., whether by a partner or direct sales force. The former would perhaps require less investment by the company, but would reap reduced profit margins. The latter would require a substantial investment and perhaps require more capital to be raised for funding. Sales outside of the U.S. are destined for Bayer and likely another unannounced partner. One benefit of the partnering deals is the upfront milestone payments and even the footing of additional expenses associated with future development efforts.
Along with commercial launches in the U.S., Europe and other parts of the world are of course, projected market share estimates, sales projections, and regulatory hurdles. Comparisons with competitive products are useful, but sometimes premature in nature to be made, as a host of factors are prevalent. For instance, if Bayer invests $200 Million in the marketing of a new drug in class and Cubist invests $50 Million, the market share and sales revenue could be vastly different regardless of the validity of the drug in question. Opportunity creates different results. The more marketing investment, the more opportunity for sales is created.
Trius has been pre-emptive in its cash management and capital raising efforts. The company reported $66 million of cash at year end 2012 and raised an additional $32 million in first quarter 2013 via an equity offering. The is an assumption that once commercialization starts, the cash burn rate from prior years (2012 average 13 Million per) will be quite different, so comparing the two may not be useful to determine if the company will have sufficient cash on hand to support its operations, continual developmental costs, and the extreme expense of commercialization; nor if they will have to go back to the public offering or equity line well. Factor in potential upfront marketing payments by partners, which at this point, are unpredictable, and you have perhaps an educated guess of cash requirements at best. To their credit, management has been smart at keeping the lights on and the expectation is that they will continue to be so.
The opportunities with Trius are multifold, both short and long term. There are the projected catalysts aforementioned, as well as just the recent performance. Currently trading at $6.81 with a Market Cap of $326 million, the stock declined in January to under $5.00 after the last equity offering, but has rebounded nicely and a continued slow upswing is likely, with catalysts as a factor as well.