Is There A Perfect Storm Brewing With Acura Pharma's Stock?

Nov. 3.11 | About: Acura Pharmaceuticals, (ACUR)

A few weeks ago I brought you an article "Acura Pharmaceuticals (NASDAQ:ACUR): Strong Investment You Can Feel Good About" that focused on the huge potential this small biotech company has in regards to revenues, a Pfizer (NYSE:PFE) partnership, a recently approved FDA pain medication(Oxecta™), two abuse deterrent technologies (Impede™ and Aversion™), and very little debt. Since that article, this stock has increased over 100% on some major key news developments (one which we already knew about and the other new).

First, on Monday, October 17th the company updated shareholders on its partnership and licensing of its Oxecta™ medication. The company stated the following about this key development (which is one key item that has already been disclosed, but was updated by the company):

“Acura is eligible to receive tiered royalties ranging from 5% to 25% on net sales of OXECTA. The royalties commence on the first anniversary of the first commercial sale of OXECTA which Acura does not expect to occur during 2011.“

So, it is clear from this update that the company will receive more royalty payments from the future sales of Oxecta™ and confirms that Pfizer has commenced its commercialization plan for this drug.

Next, the company announced on Tuesday, October 18th via a press release that it would be participating and presenting at the 18th Annual NewMakers in the Biotech Industry Conference at the Millennium Broadway Hotel in New York, City which will be held on Friday, October 21st, 2011. During the presentation, material information concerning the company, its operations, strategies and prospects may be discussed. This is one of many conferences that Acura Pharma (ACUR) has attended this year and should be viewed as a positive by shareholders in regards to informing the public about the company and its product pipeline.

So, are there still returns to be had? Well, let’s look at a few things. First, the stock hitting $5/share, in my opinion, was a huge hurdle to cross. It is a level at which most institutional investors are not able or will not buy a stock – so – this is a key level for Acura stock in regards to the increased likelihood of institutions to add to their positions. Second, we must look at the share structure and institutional ownership. As of October 18th, 2011 the company had 45 million shares outstanding (very small for a start up biotech – in my opinion) and 5.2% institutional ownership of which two institutional holders increased their shares by a huge percentage. Both of these increases were reported on 9/30/2011 and were from Osborn Rohs Williams & Donohoe, Inc., with an increase of 57,196 shares or a 38.13% increase over their previous holdings. Next, Rhumbline Advisors increase their position with an additional purchase of 3,840 shares or a 24.41% increase of their previous holding. These can be a strong indicator that institutions are bullish on the company. So, it appears that the increase in share price over the past few weeks is due to what I would like to call a “perfect storm” of key company events, low share structure, and an increase in institutional investors. Overall I continue to support my recommendation to be Long ACUR!

Disclosure: I am long ACUR.