Two recent projections regarding Trius Therapeutics, Inc. (TSRX), and a separate development, all indicate positive news going forward for the biopharmaceutical firm, as they methodically move forward with business matters and continue significant drug development.
Last week, WBB securities announced it had begun coverage of Trius Therapeutics with a buy rating and a $7.00 per share target, conservative compared to the Zack's report projecting $12.00. Trius is currently trading at $5.51, up from approximately $5.00 in May of this year.
Zack's cites several very positive factors that include strong fundamentals, validity and probability of their lead investigational drug (IND) tedizolid phosphate, its strong partnership with Bayer Pharma in AG, Asia/Pacific and emerging markets, and strong cash position of $83.8 million at the end of Q2, 2012. Zack's most significant comments include a $12.00 per share value, valuating the biopharmaceutical at around $400 million in contrast to its current $215 million.
Both projections are positive for Trius and presents the case for their value as a company and share price to grow. Long term consistent upticks seem imminent.
On Friday, the company announced it had obtained up to $25 million of a committed equity financing facility (ELOC) with Terrapin Opportunity, L.P., to be potentially used over a 24-month period. This positions Trius to use, at its discretion, the funds for general business operations or perhaps drug commercialization purposes for its Phase 3 tedizolid phosphate product, but does not commit them to do so. The terms of the ELOC are beneficial for Trius. If utilized, the company would determine the timing, the dollar amount and the floor price per share before using the line, as their shelf registration statement enables them. The financing facility also does not prevent Trius from entering into other equity or financing agreements, (although seemingly unnecessary at this point), and there are no warrants associated with the Terrapin agreement.
While use of the line may constitute a shareholder dilution of sorts, collectively, the healthy cash on hand the company reported at the end of Q2, 2012 and the equity line help strengthen Trius' position going forward with the tedizolid commercialization process. It positions the company in a stronger stance for negotiations for commercialization when often biotech's have to give away too many patent and marketing rights just to obtain a deal, therefore diluting their revenue stream. The company has avoided this situation by smart cash management, a revenue stream over past financial quarters, and the equity line of credit, all netting positive signals to institutional investors along the way as well.
Using WBB's conservative but encouraging share price valuation, taking into consideration the progressive Zack's report and its researched facts, then adding management's cerebral method of efforts, Trius appears to be poised for both near and long-term gains.