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Avanir Pharmaceuticals (AVNR) announced the approval of Nuedexta during the fourth quarter of 2010, and shares quickly approached the six dollar mark in the trading days immediately following the release, making the stock a clean double in a very short period of time.

Those who may have taken advantage of some suspect trading that saw the stock dip to a low of $1.31 during the last hour of trading before the after hours approval announcement enjoyed gains of well more than a double.

Since then, however, Avanir has announced a stock offering to raise money for Nuedexta's commercial launch and the share price has since retreated to where it stands today, which is in the mid-$3 range.

The volatility comes as no surprise to those familiar with the biotech sector, and especially for companies such as Avanir whose stock fall victim to 'bear raid' trading as we saw on the day of the announcement, but the question investors will ask right now is whether or not this is the time to buy, since shares have depreciated significantly off the highs.

Neudexta is a treatment for pseudobulbar affect (PBA), a condition characterized by spontaneous and uncontrollable laughing and/or crying, and is slated to be the first-line treatment for that condition since there is effectively no other approved product on the market at the current time.

Analysts have predicted that sales for Nuedexta will approach the $500 million mark on an annual basis, leaving plenty of room for appreciation of the AVNR share price as the product hits the ground and starts chipping away at that price target. It also leaves plenty of room to advance the pipeline without having to raise cash over the mid to long term.

Avanir may have also become an opportune takeover target for big pharmaceuticals, most of which are looking to boost their pipelines and revenue streams over the short term since many big-named drugs are coming off patent over the next couple of years.

With an approved product ready for market and a pipeline in tact, Avanir fits the bill just as well as some others, namely Amarin Corporation (AMRN), whose shares are sliding, and Apricus Biosciences (APRI), which has a fairly robust pipeline ready to go.

An already volatile sector may continue to become even more so with the global unrest and potential for crisis, but there's some stock slides that are presenting nothing more than an opportune buy time with eyes toward the future.

Avanir is one of those, in my opinion.

The current prices are attractive enough, but should the stock sink even lower, and it's a possibility having seen the suspect trading on announcement day, then the risk/reward becomes that much better.


Disclosure: I am long AVNR, AMRN.

Source: Avanir Primed for a Rebound?