Anesiva: Smallcap Biotech With a Promising Pipeline

| About: Anesiva Inc. (ANSV)

Anesiva (ANSV) is a company that focuses on the development of pain management products. The company is tiny, with a market capitalization of just $135 million, and has no revenues. As of June 30, the company had $67 million in cash, but the company is spending $14-15 million per quarter and will have only $35-40 million left by year end. Adding in $30 million in committed equity financing, the company has sufficient capital to operate until year-end 2007 at the current burn rate.

What prospects does the company have for increasing the value of its pipeline by the end of 2007?

1. Zingo
Zingo, until recently known as 3268, is Anesiva’s closest product to a market. Zingo is a fast-acting local anesthetic which Anesiva is planning to market for pediatric venous access procedures. The company has already completed phase III pediatric trials and has stated that it will file a New Drug Application with the FDA in September or October of 2006. Unlike competing products which are primarily creams, Zingo is not messy to apply, and is effective in 1-3 minutes as opposed to 15-60 minutes. Zingo has an opportunity to both take away business from existing drugs, and, because of its ease of use and fast action, to expand the percentage of venous access procedures which make use of an anesthetic. As the company has not partnered this drug, it will be responsible for all marketing costs and receive all products. While this is not a blockbuster, if approved, it could be sufficient to support development of additional products. Revenue could be seen as early as late Q2 2007, or sooner if the signing of a partnership results in milestone payments.

2. 4975
4975 is a drug that’s further away from the market, but shows much greater potential. A long lasting, non-opoid, site specific analgesic, 4975 can provide pain relief for weeks or even months with a single treatment. Successful Phase II trials have been completed in several indications, including post-surgical, total knee replacement, and elbow tendonitis. While there is still significant risk that this will not make it to market, the size of the opportunity will allow for rapid stock appreciation as this advances towards approval.

3. 1207
A treatment for neuropathic pain, the company is currently planning a phase I trial. Not much here yet, but additional data could have an impact.

Anesiva’s pipeline webpage also lists Avrina, an anti-inflammatory drug that had been tested in early trials for eczema, but development appears to have stopped, and I would be shocked if any value were created from this.

Anesiva’s history is a cautionary tale of the danger of investing in development stage pharmaceutical companies. Anesiva came public early in 2004 as Corgentech. At the time, the company had a promising compound in Phase III to treat vein graft failure, with which it partnered with Bristol Myers Squibb (NYSE:BMY). It also had development programs in inflammatory diseases and cancer. When its lead candidate failed, the company retrenched and eventually merged with private AlgoRx Pharmaceuticals. AlgoRx was the developer of Zingo, 4975, and 1207. Earlier this year, Corgentech changed its name to Anesiva to indicate its new focus on pain relief.

At Thursday’s close of $6.73, I believe this makes sense in our basket. The data that has already been released seems sufficient to support approval of Zingo, and the huge potential market for 4975 could result in big gains as it progresses through the clinic.

Read my Five Questions To Ask on Dev-Stage Biotechs

Disclosure: I own stock in ANSV