Just in case you live under a rock, I will point out that the stock market has taken quite a hit the past few weeks. The massive sell-off has consumed the talking heads on cable television and plastered the front pages of newspapers across the world. The biotech sector in particular has been among the groups taking the biggest brunt of this new wave of pessimism. A cut in the US government credit rating, a fragile macroeconomic recovery, and negative developments from Dendreon (NASDAQ:DNDN), have put extreme pressure on the whole biotech sector.
As traders scramble for safe havens, many have been pulling money indiscriminately out of stocks. These include companies that are more immune to the wider economic turbulence. In many cases, these victims are solid companies whose fundamentals and prospects have not changed over the past weeks. Yet many of their rather ugly monthly stock charts would appear to reflect otherwise. If you are careful, some smart (but also brave) investors can scoop up solid stocks at massive discounts from what they were trading at just weeks ago.
Apricus Biosciences’s (NASDAQ:APRI) stock price, for example, has been buzzed down to almost half the value the company was trading at earlier this year. Sparing you the dry in-depth scientific explanation, Apricus Bio owns the rights to a drug delivery technology known as NexACT®. When combined with other drugs, NexACT® enhances the permeation and delivery of compounds through human skin and tissue into the body. Thus, the technology both improves the absorption of compounds while also making them safer, as the drugs can be targeted to one specific area of the body.
The company now has a wide array of drugs in its pipeline. Late last year, the company received its first approved drug called Vitaros® in Canada. Vitaros® is a revolutionary drug for Erectile Dysfunction. It is the first approved treatment that is applied topically. The drug has proven to be safer than leading oral treatments and can therefore be used by a wider population set, such as those with heart conditions. As a bonus, Vitaros® has also has been shown to work more rapidly.
Apricus Bio, a casualty of the recent market massacre, had its stock price plummet last week. However, the company’s fundamentals and progression toward its goals have not changed. In fact, Apricus Bio is now on the precipice of transitioning from a developmental stage company to commercializing its first approved treatment. The second half of 2011 appears to be the most promising yet.
To be fair, investors have become impatient with the pending Canadian partnership. But the company has, time and time again, proven it can secure lucrative deals. It has also made it abundantly clear that a Canadian deal is real and will be announced, likely sometime this fall.
Last Thursday, CEO Bassam Damaj reiterated in a press release that the completion of a Canadian Vitaros® partnership (and possibly one also covering the billion-dollar ED market in Europe) should be announced in “the near future.” The CEO also states that he “… believe(s) that our shareholders will be pleased, both in terms of the economics of our partnerships and the caliber of our partners for these territories, once announced."
After the midday PR, Apricus Bio’s stock price came roaring back, finishing the day as one of the few bright spots of the beaten biotech sector. This demonstrated investor confidence in the CEO, as well as the fact that the near-term for the company is quite promising.
Management is openly confident a partner will soon be announced and has backed this up by heavily investing in the manufacturing of Vitaros®. They have completed production of the engineering batches, with commercial ones to follow suit for sales that are projected to begin pulling in revenue before the end of the year.
Using the smaller partnerships already secured for Vitaros® as a guide (from Israel and Italy for example), a Canadian partnership deal, especially one in combination with Europe, will easily be worth tens of millions of dollars. Not bad for a company with a 70 million dollar market cap. Of course, none of that even considers other drugs in the pipeline or the licensing of NexACT® to other pharmaceutical companies.
Apricus Bio is trading at a massive discount from just weeks ago. But despite being a victim of the market hysteria, the future of Apricus could not be clearer, or more promising.
Disclosure: I am long APRI.