Anesiva: Positive Near-Term Developments Present Buy Opportunity

| About: Anesiva Inc. (ANSV)

Anesiva (ANSV) is a promising biotech stock that has about $70 million in cash and no debt, which is sufficient to fund operations into 2008. I will provide a quick summary today of the company’s recent presentation at the Citi Healthcare Conference along with my opinions of the company’s prospects.

The FDA will likely approve the company's lead product candidate Zingo by a PDUFA date of 9/24/07 for an initial pediatric label. Zingo is a rapid onset (1 minute) needle-free system that delivers the widely used anesthetic lidocaine as a compressed gas to numb the skin before needle-sticks or IV insertion procedures. Anesiva also plans on making a sNDA filing by year-end for adult use with only a single Phase 3 trial required and expected to be completed by the third quarter.

In April, Anesiva sent notification to Endo Pharma (NASDAQ:ENDP) stating that Zingo is not meant to be a generic form of Endo’s marketed lidocaine patches Lidoderm and Synera. Zingo will compete with Synera to numb the skin before needle sticks. I am willing to speculate that Endo may just decide to acquire Anesiva for Zingo (once approved) and their major product candidate dubbed "4975" given Endo’s history of growth by acquisitions of smaller companies that offer novel pain treatment technologies and products.

Zingo has several advantages over its existing competitor's EMLA cream (a mixture of two anesthetics – lidocaine and prilocaine) and the Synera patch (also contains two anesthetics – lidocaine and tetracaine). EMLA cream is a messy emulsion formulation with a long 1 hour onset, but it is cheap with generic formulations available for a treatment cost of about $8.34. The Synera patch has a faster onset of action at about 20-30 minutes at slightly higher $12.60 treatment cost.

Anesiva expects to price Zingo at about $12-16, and it works very quickly in just one minute with a 15 minute duration, versus competing products that have a numbing effect of one to two hours, which is a disadvantage since patients don’t want to experience a lingering numbing effect. Anesiva also conducted a survey of nursing directors which concluded that quick onset was the most important issue while cost was least important for topical anesthetics being used before needle sticks or IV placements.

Finally, Anesiva's pain drug candidate “4975” has blockbuster status as a long-acting, local injection being studied and developed for post-surgical pain and osteoarthritis initially. Four studies are planned for 2007 in osteoarthritis, total knee and hip replacement, and arthroscopic shoulder surgery. 4975 is a long-acting (weeks-months), locally-injected formulation of capsaicin (the active/hot component of chili peppers which is currently only available OTC in pain-relief creams) that results in very low exposure and absorption to avoid the systemic side effects of existing pain treatments such as opiates and NSAIDs.

Given the expected approval of Zingo in the fall for pediatric use, expansion of Zingo for adult use, and the blockbuster potential of pain drug candidate 4975, Anesiva is a little-known biotech that is worth looking into for positive near-term developments. I also like the potential for a company like Endo to take a look at the company in order to expand upon its portfolio of pain treatments and research pipeline.

ANSV 1-yr chart


Disclosure: none