Trius Therapeutics: Uptick Opportunities

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 |  About: Merck & Co Inc. (MRK)
by: Kyle Rankin

Last Wednesday, WBB Securities initiated coverage on shares of Trius Therapeutics Inc. (TSRX) and issued a buy rating with a $7.00 price target. Trius is currently trading at $5.55. The biopharmaceutical has a 52wk Range of 4.71 - 8.00, and a market cap of $215 million.

The company's CEO Jeffrey Stein, Ph.D., will be presenting at the upcoming Baird's 2012 Healthcare Conference in New York on Friday September 5th, and again on September 7th at the Biotech Industry Conference in New York. Anyone who has ever heard Mr. Stein speak knows he articulates the company's position and products well and convincingly. There is a solid basis to this company and a long position with a relatively inexpensive buy in, at the range of mid $5.00, should be beneficial.

Here is a refresher on Trius and some points that should assist the company and its stakeholders with a continued climb in value.

This biopharmaceutical company is in the business of developing innovative antibiotics for life-threatening infections. It's quite promising and lead investigational drug, tedizolid phosphate, is in Phase 3 clinical development for the treatment of acute bacterial skin and skin structure infections (ABSSSI) - frequently in the news as a growing concern since big pharmaceutical firms have in many ways abandoned this market.

Tedizolid has the potential to be a blockbuster, billion dollar drug boosting the company's value to the $50.00--$60.00 per share range in years to come, perhaps by 2020 by some analysts' projections.

Upcoming catalyst event

Expected in early 2013 are the data results from a second Phase 3 trial, an IV-oral switch study that is intended to confirm the positive results of the earlier oral Phase 3 trial for treatment of ABSSSI. There could be a run up of value leading up to that data release. The risk of course is if the results are negative, but this is a confirmation test of prior results.

Next up: commercialization

Post-data release, company management will have to plot a path for commercialization. Through its development and clinical trial testing stages, a positive note is that the company has retained all product rights in the United States, Canada, and Europe. Whether the company decides to go its own route and build a sales force, or reduce risk (but also profits) by partnering with a significant pharma firm is yet to be determined. Three different strategies could emerge - one for each country. Either way, those announcements again represent catalyst events. This could occur in late 2013 or early 2014, pending final FDA approval, and again opportunity exists here for buy-in and uptick.

Right now, if you're an investor, the market projections don't matter for ABSSSI remedies, or even tedizolid phosphate itself, as they are perhaps all to premature.

There are other firms and products competing in this space at present, such as vancomycin which has been the 'go to' drug for decades. An entire market analysis should be done that articulates current players, their products, the effectiveness of those products, market share, sales potential etc. It's still early in the game for Trius and their tedizolid phosphate remedy for ABSSSI. But one thing remains certain, ABSSSI and like infections seem to be growing and the remedies of old becoming more and more ineffective.

The upcoming sets of events represent opportunities for investors over the next 12-18 months, regardless of a market analysis or competitive factors. The company has approximately $85 million in cash so the lights are on indefinitely at this point.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.