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Acura Pharmaceuticals, Inc. (NASDAQ:ACUR) is very undervalued at its current price per share in the lower 2's and has a very bright future. I began formulating this article prior to the announcement by the FDA that they were pulling commonly abused generic drugs such as generic OxyContin off the market; it was basically a gift to Acura cornering that multibillion-dollar market for abuse resistant drugs and pulling all generic forms (competition) off the market, and by the sound of it, this is the first decision of many to pull generics that are abused.

I say this because along with this decision they announced it was their priority to reduce the astronomical numbers of abused drugs. This coupled with the extensive pipeline and technologies that Acura has to prevent abuse will lead to Acura gaining huge portions of those markets that had previously been occupied by the generic cheaper forms. With these patented technologies, 21 million in assets and cash, no debt, and a massive pipeline,coupled with the support of the FDA, they are are poised for quick, rapid growth and I will discuss this further in my article.

Company overview from Acura's website:

Acura Pharmaceuticals, Inc. is a specialty pharmaceutical company that leads the battle of stopping medication abuse and are ahead of the game with their proprietary and recently patent approved abuse deterrent AVERSION® and IMPEDE® Technologies. This stock caught my eye before the approval of Nexafed and I really like what they have in there pipeline to propel extreme long term growth and the potential for massive revenue that should begin coming from the newly approved and marketed nasal decongestant Nexafed. ACUR has great potential for rapid growth and revenue from Nexafed and we will see the price per share rapidly increase with news of another contract with another drug store (hopefully a big chain such as Wal-Mart (NYSE:WMT) or CVS (NYSE:CVS) starting to carry Nexafed. In this article I will expand on why ACURA stock is grossly undervalued and the catalysts that will propel the stock price in the 4-5 dollar range in the near future and the great potential for strong long-term growth they are capable of with the approval of the many already formulated abuse proof drugs they have in their pipeline.

Prescription drug abuse is a growing epidemic; fighting that is Acura's specialty

Acura uses their patented Aversion and Impede technologies to produce a drug that cannot be abused. Over 31 million Americans abused prescription and over-the-counter drugs and with the massive pipeline of drugs that are being tested, they have the ability to corner the market of those abused drugs.

http://acurapharm.com(click to enlarge)

How the Two Technologies Work

Aversion technology causes the drug to gel, making injections or nasal inhalation impossible, and once gelled it is useless:

The other patented technology that is primarily used in Nexafed is the IMPEDE technology, which does just what its name implies, and disrupts the extraction of PSE from the tablets for conversion into Meth Amphetamine.

What the Near Future Holds

Financial figures according to the 10-K:

For 2012 Acura posted a loss of 3 million, but has 27 million in cash from the partnership with Pfizer and the approval and marketing of Oxecta and with the recently approved Nexafed and the entrance into their first contract with Kerr drug store to supply Nexafed, (both catalysts that propelled the stock up 30% and then 50% to 3.75 per share at one point), Acura should begin to turn a profit and a large one at that, depending how fast Nexafed is put into other, larger drug chains. Acura is due for a bounce, and this will come with the next announcement of a contract with a large chain drug store, which I believe will be coming very soon. Following big news like that, I believe it will continue to climb into the $4 area. Nexafed has potential to take hold of the PSE market and push aside leading drugs, such as Sudafed, to be a major competitor in nasal decongestants. Due to the Impede technology, it would be available non-prescription and capture a large portion of the billion in annual sales that come from PSE products.

AC Nielsen reported approximately $1.0 billion in sales of non-prescription products in 2009 containing either PSE or phenylephrine as a nasal decongestant, of which approximately 47% contained PSE. In Acura's 2012 survey of 215 chain and independent pharmacists, 164 indicated they had influence over the pharmacies' product offerings. Of such pharmacists, 70% indicated they were likely to stock or recommend stocking NEXAFED® in their pharmacies. The 215 surveyed pharmacists also indicated a willingness to recommend NEXAFED® to over 50% of their customers who seek a pharmacist's advice for a single ingredient nasal decongestant. [PR Newswire]

The near future looks very bright for Nexafed

The pipeline: Long-term potential

The only thing that has me more excited then Nexafed for Acura is what's in store down the road. They have a massive pipeline of seven drugs. Below is a description of each and then a chart showing the progression. If you look at the chart above of the most abused drugs and what's in the pipeline for ACUR, you will see they are developing a solution for 3 or 4 of those massively abused drugs - and this means, if approved, there will be a massive market for them, as was the case with Nexafed.

Acura is developing seven other products that utilize AVERSION® technology to deter abuse and misuse. The company is currently evaluating the strategy for these products, including possible commercial partners.

Pipeline Drug Prescriptions

Hydrocodone bitartrate/acetaminophen Tablets

Hydrocodone bitartrate/acetaminophen tablets are immediate release opioid analgesic tablets with a proposed indication for relief of moderate-to-severe pain, and are designed to introduce limits and impediments to potential abuse via nasal snorting of crushed tablets and intravenous injection of dissolved tablets. The tablet contains two active analgesics: the opioid hydrocodone bitartrate and acetaminophen.

Oxycodone HCl/acetaminophen Tablets

Oxycodone HCl/acetaminophen tablets are immediate release opioid analgesic tablets with a proposed indication for relief of moderate-to-severe pain and are designed to introduce limits and impediments to potential abuse via nasal snorting of crushed tablets and intravenous injection of dissolved tablets. The tablet contains two active analgesics: the opioid oxycodone HCl and acetaminophen.

Hydromorphone Tablets

Hydromorphone tablets are immediate release opioid analgesic tablets with a proposed indication for relief of moderate-to-severe pain and are designed to introduce limits and impediments to potential abuse via nasal snorting of crushed tablets and intravenous injection of dissolved tablets.

Morphine Tablets

Morphine tablets are immediate release opioid analgesic tablets with a proposed indication for relief of moderate-to-severe pain and are designed to introduce limits and impediments to potential abuse via nasal snorting of crushed tablets and intravenous injection of dissolved tablets.

Oxymorphone Tablets

Oxymorphone tablets are immediate release opioid analgesic tablets with a proposed indication for relief of moderate-to-severe pain and are designed to introduce limits and impediments to potential abuse via nasal snorting of crushed tablets and intravenous injection of dissolved tablets.

Tramadol Tablets

Tramadol tablets are immediate release opioid analgesic tablets with a proposed indication for relief of moderate-to-severe pain and are designed to introduce limits and impediments to potential abuse via nasal snorting of crushed tablets and intravenous injection of dissolved tablets.

Methadone Tablets

Methadone tablets are immediate release tablets with proposed indications for relief of moderate-to-severe pain not responsive to non-narcotic analgesics, for detoxification treatment of opioid addiction (heroin or other morphine-like drugs), and for the maintenance treatment of opioid addiction (heroin or other morphine-like drugs), in conjunction and are designed to introduce limits and impediments to potential abuse via nasal snorting of crushed tablets and intravenous injection of dissolved tablets.

(click to enlarge)

Financial Overview

I like the financial situation of ACUR for a few reasons. First, because of the Pfizer agreement and approval and marketing of Oxecta, they received a $20.5 million milestone payment and that will cover their operations for many upcoming years, even if they did not receive a dime of revenue - which will not be the case. They had $20.5 million in revenue in 2011 and are still sitting on $10 million in cash after burning $9.7 million in 2012 with no revenue, mainly due to the focus on the approval of Nexafed. But that has happened and will begin to pay off big time and they are beginning to hack into a huge revenue stream with Nexafed's approval and sale in stores. Their revenue will grow exponentially with the advancement of Nexafed sales and the promising pipeline. Although FDA approval is not certain for the drugs being currently developed, it looks very bright due to the emphasis placed on reducing prescription abuse by the FDA and with the approval of Nexafed. Approval of each of those will be major catalyst for the stock. Any partnerships on certain drugs, such as the one with Pfizer, will result in what will be big paydays and be very beneficial to the stock.

Sources: all drug descriptions, charts and financials come from Acura's website and 10-K form.

Conclusion

At $2 - 2.50 per share, ACUR is seriously undervalued and has consolidated, preparing for another run. It will run with an upcoming catalyst of a news release of another contract with a big pharmacy, such as Wal-Mart or CVS, to start carrying Nexafed. The future looks bright and the pipeline is even brighter for Acura. Rapid growth is imminent. With $27 million in cash and Nexafed starting to get on the market as a big competitor, Acura is sitting pretty.

Source: Acura Pharmaceuticals Is Grossly Undervalued And Poised For Rapid Growth