Apricus Trades Higher on Long Term

Apr.18.11 | About: Apricus Biosciences, (APRI)

Shares of Apricus Biosciences (NASDAQ:APRI) were trading higher last week, once again breaching the five dollar barrier, after the company announced that it had filed with the U.S. FDA to receive an orphan drug designation for RayVa, Apricus' experimental new treatment for Raynaud's phenomenon, a condition in which the blood supply to the fingers or toes is suddenly reduced.

RayVa is currently being geared up for Phase III trials and utilizes Apricus' proprietary NexACT drug delivery technology, one in a fairly robust pipeline of products utilizing the technology.

The announcement of the orphan drug designation filing wouldn't be enough - on its own (in my opinion) - to send shares of Apricus higher, but there are some potential short term milestones in the works to which shares of APRI could be responding.

According to recent comments by the CEO Dr. Bassam Damaj, the company is in late-stage talks with multiple "major pharmaceutical companies" to bring Vitaros - Apricus' lead product treating erectile dysfunction - to market in Canada, where it was approved late last year.

It's expected that a partnership announcement will be forthcoming in the second quarter of 2011, with additional commercialization deals being announced through the course of the year.

Additionally, a payment from Italian partner Bracco, to the tune of just about one million dollars, is expected to roll in before the end of the second quarter, adding to the company's cash reserves which are already robust enough to last into 2012.

By then, Apricus should also be drawing on revenue from Vitaros sales in Canada.

A filing for European approval for Vitaros is expected at some point in the next few months as well, and while a decision on approval would still not come until 2012, Europe could end up proving to be a lucrative market for Apricus over the long term, especially if Italian President Silvio Berlusconi and his cronies remain in power.

If approved in Europe, Apricus expects to be reaping revenues from sales early in 2013, with possible up-front payments from European partners coming before that time.

A filing for approval in the United States is also expected this year, and the company will be looking to move the product into various other markets around the globe while the rest of the pipeline develops.

Aside from RayVa and Vitaros, Apricus has quite a few late-stage pipeline products that are set to reach developmental milestones over the next couple of years, including PrevOnco for liver cancer, which is being prepared for a Phase III trial, and FemProx, a treatment for female sexual arousal disorder.

The above-mentioned PrevOnco leads the oncology pipeline, but Apricus also has multiple product candidates in their infancy stages of development.

MycoVa, for the treatment of Onychomycosis, joins RayVa as a late-stage product being geared up for Phase III.

With the validated drug delivery technology NexACT, Apricus will look to boost its pipeline even further by combining the technology with numerous drugs that will be coming off patent over the next couple of years, only adding to the long term potential of APRI.

This company is no sure-bet just yet, but with the potential of NexACT only just beginning to be fulfilled, Apricus could continue to see some significant price appreciation should the pipeline develop as planned and the company attract the interest of potential big partners.

A buyout is also a possibility, as the current market cap of under one hundred million is chump change for big pharma, although Apricus may have to prove that its technology and products sell on the market before becoming a serious target for a merger or acquisition.

In the meantime, the mid to long term potential remains for APRI, and it should be at least on the watch list for investors in the sector.

Disclosure: I am long APRI.