Pozen's Final Results On Ulcer Safe Aspirin Can Send Shares Soaring

Mar.20.12 | About: Pozen, Inc. (POZN)

If the final studies of PA32540, POZEN Inc.'s (NASDAQ:POZN) new proton pump inhibitor with aspirin for cardiovascular disease patients who are also at risk of gastric ulcers, are positive, then POZEN Inc will doubtless find a partner. And in the Third Quarter it will file a New Drug Application (NDA). In my opinion, this will send their shares to new heights.

POZEN Inc. is much undervalued today--despite having over $110 million in cash and, as of March 16, 2012, being valued at $140 million. It also has two approved drugs and another in final studies. Finding a new partner for PA32540 will result in milestone payments as well as assure future royalties. In my opinion, this should create a sudden surge in price in the next few months. Even if PA32540 does not pan out, risk is limited.

The other drugs in POZEN Inc's future are Treximet (with GlaxoSmithKline (NYSE:GSK) for migraine attacks), plus VIMOVO with AstroZeneca (NYSE:AZN) for arthritis to decrease risk of gastric ulcers. Treximet royalties sold out for a one-shot $75 million (Treximet royalties are 20% and return in 2018) and VIMOVO has been gaining sales, albeit slowly. It's expected that global sales of VIMOVO will soon surpass US sales - at least according to POZEN Inc's recent quarterly report.

Analysts' recent predictions are:

  • Jonathan Achoff (Bean Murray & Co): price target of $ 7
  • Jason Napodana (Zacks Equity Research): price target of $ 7
  • EUN K. Yang (Jeffries & Co): price target of $ 7

Note that many advisors are staying with the old price target of $ 4 per share.

POZEN Inc, offers a shot at solid gains in a few months with little downside risk since it has cash and three drugs. Several analysts foresee $7.00 a share this year. As of March 16, 2012, POZEN Inc., traded around $4.80 a share--it's the third time POZN tested the $4.80 resistance level. If it can break past the $4.80 area it will start to look pretty bullish on the charts.

Disclosure: I am long POZN.