With the share price of Avanir (NASDAQ:AVNR) having inched upwards all week last week on fairly heavy volume, it will be a stock to watch during the coming week.
The AVNR share price has slipped off its highs of nearly six dollars since receiving approval for Nuedexta in the treatment of pseudobulbar affect (PBA) - a neurological condition that leads to spontaneous episodes of laughing and/or crying - last year and announcing a stock offering shortly thereafter. and short interest has increased along the way as well, topping out at roughly 32 million shares short as of 15 April.
The modest rise in share price on heavy volume last week, however, could be an indication that the short shares are being covered.
It's earnings season as well, and although Nuedexta has not even been on the market for a full quarter, investors should have a chance to gauge whether earnings surprises could be in store over the next couple of quarters as the product gains traction on the market.
Over the mid to long term, Nuedexta is expected to become a first-line treatment for PBA. There is currently no approved competition on the market to treat that indication, and some analysts and observers have predicted that it could eventually rake in up to half a billion dollars on an annual basis in the coming years.
There's additional potential with Avanir as well.
AVP-923 is currently being tested in a Phase II trial for central neuropathic pain in patients with multiple sclerosis, and testing for the product could be expanded into other indications related to ailments of the central nervous system.
Avanir is definitely not a company or a stock without risk, however, as none in the pharmaceutical/biotech sector are, but the long term potential looks solid as Nuedexta gains traction on the market and the possibilities for partnerships emerge.
With a trend towards pharmaceutical mergers and acquisitions (M&A), Avanir and it's AVP-923 could look like an attractive draw to a larger company looking to immediately boost its revenue and pipeline potential.
Given the trading of last week, this week could be shaping up to be even more exciting.
Keep an eye on Avanir.
Disclosure: I am long AVNR.