Anesiva 'Pain-free' High Growth

Anesiva (ANSV) is a tiny biopharmaceutical company about to enter a stage of high growth thanks to the successful launch of a niche pain relief product that has the potential for adoption as the standard treatment for pain related to needle procedures and orthopedic surgeries.

It All Starts With Zingo: Zingo is a needle free, painless, topical product approved by the FDA for use on children ages 3 to 18 in order to numb the skin prior to drawing blood or inserting an IV. Each Zingo device contains .5 mg sterile lidocaine powder. When the device is activated, compressed gas accelerates the lidocaine particles into the skin, numbing the area after approximately one minute. This is a vast improvement over anesthetic creams which can take between 30 to 60 minutes to work.

Any parent should welcome the use of Zingo on their children in order to assuage the fear of pain associated with any procedure involving a needle. In order to provide better care to their clients, doctor offices should be quick to adopt the product for use in their offices.

Zingo has been approved for use by the FDA and the product was launched at the end of June in the United States. According to information in the company's second quarter 2008 press release, Anesiva has signed an exclusive licensing and distribution agreement for territories in the Middle East and expanded a current distribution agreement to include "most of Europe."

Adult Zingo: The FDA has also accepted Anesiva's application to expand Zingo's use for adults. The Prescription Drug User Fee Act will require the FDA to make a decision regarding approval by January 2009.

The company estimates 18 million pediatric needle procedures are performed annually in U.S. hospitals alone. With the pending approval for adults in the U.S. as well as Europe, Zingo has a huge potential market.

Adlea in the Pipeline: The company is in Phase III trials of Adlea, a long-acting, non-opioid analgesic drug candidate designed to provide pain relief for weeks to months after a single local application. The Phase III trials are currently focusing on the use of Adlea in knee replacement surgery.

Currently, orthopedic surgery patients are given opioids such as morphine for pain relief. The advantage that Adlea has over opioids is that is applied to the surgical area locally instead through the entire body like morphine. Trial data has also shown that one application has been effective managing pain for up to months at a time.

Phase II trials are currently underway for the use of Adlea in hip replacement surgery as well as arthroscopic shoulder surgery. Anesiva also sees osteoarthritis and tendonitis patients as a potential market for Adlea.

Recent Quarter Results: The company reported 2008 Second Quarter results on August 7, which looked similar to many small biotech companies:

For the second quarter of 2008, the net loss was $21.9 million, or $0.54 per share. In the second quarter of 2007, the net loss was $13.8 million, or $0.51 per share. The net loss for the six months ended June 30, 2008 was $43.4 million, or $1.08 per share, and for the six months ended June 30, 2007, the net loss was $25.5 million or $0.93 per share.

As of June 30, 2008, cash, cash equivalents and investments were $48.7 million compared to $90.8 million at December 31, 2007. The company believes it has sufficient resources to fund anticipated expenses for the remainder of 2008 and into 2009.

The company attributed the increased operational expenses to the preparation for the launch of Zingo and the continued development of Adlea.

Conclusion: With Zingo, Anesiva has delivered a product that has distinct competitive advantages over any other available product, and has potential for widespread adoption among a large customer base.

With Adlea, the company also has an additional product in late stage trials that has significant advantages over any other pain management drug on the market.

With shares trading right around $2.00, this seems like a cheap price to pay for two potential blockbuster drugs, one of which is already on the market and should contribute to the company's income statement as early as next quarter.

Disclosure: The author holds a long position in ANSV.

Comments

[hoopdreamer...:]

Zingo is going to be a total bust. Mark it. Its not the needlestick pain that kids fear, its the needle. Emla, the cream costs pennies, why would hospitals or managed care pay $20 for Zingo? I believe Anesiva has dramatically overstated what the potential market is.

As for the hot chilli pepper for pain, that's a joke product too. In order to be used a patient needs to be unconscious because as you'd expect the product gives an intense burning sensation. There's also concern that it could dull nerves over time and create a rebound pain far worse than preexisting.

I'm not too optimistic on Anesiva but best of luck. At least you're in at $2 and not $10.

2008 Aug 15 08:10 AM

[Tim Hiteshew:]

Hi, I'm the author. The issue with Emla and other local anesthetic creams is that they take too long to work. Emla can take up to 60 minutes to work, whereas Zingo takes 1-3 minutes. That is one of the reasons why Zingo will be revolutionary. Nurses and doctors will wait 1-3 minutes for Zingo to work before they give a patient a shot, not 60 minutes.

2008 Aug 15 08:52 AM

[essvee:]

The problem I see with the use of Zingo is the cost; I agree with Jose. the state of affairs in medical practice currently is such that every penny of cost is carefully evaluated and the availability of a product does not imply its use automatically. Moreover not every child wants or needs a pre anesthetic prior to blood draws.

2008 Aug 16 09:45 AM

[knight722:]

Don't we teach our kids anything anymore?

2008 Aug 17 06:19 PM

[ebeng:]

The company should lower the cost of the product to start moving it, or maybe give it away and make money on the supplies. It could also be used for other applications where the cream is used, such as minor facial procedures.

2008 Aug 17 06:32 PM

[Amartha:]

I have been to India for my hip replacement treatment. I did a lot of research and found
out about valuemedicare.com , a leader in medical tourism. ValueMedicare gave me excellent services. Though this company is a little expensive compare to other medical tourism companies(though it is still very cheap compare to US) but then you get treated by the best doctors in the best hospitals.

2008 Aug 18 02:41 PM

[sal bando:]

Recently, capsaicin is being tested for the prevention of pain post surgery. David Julius, a physiology professor at the University of California, San Francisco, recently discovered that capsaicin selectively binds to a protein known as TRPV1 that resides on the membranes of pain and heat sensing neurons. TRPV1 a heat activated calcium channel, with a threshold to open between 37 and 45 Celsius degrees (37 degrees is normal body temperature). When capsaicin binds to TRPV1, it causes the channel to lower its opening threshold, thereby opening it at temperatures less than the body's temperature, which is why capsaicin is linked to the sensation of heat. Prolonged activation of these neurons by capsaicin depletes presynaptic substance P, one of the body's neurotransmitters for pain and heat. Neurons that do not contain TRPV1 are unaffected.[9] This causes extended numbness following surgery, and the patient does not feel pain as the capsaicin is applied under anesthesia.

The result appears to be that the chemical mimics a burning sensation, the nerves are overwhelmed by the influx, and are unable to report pain for an extended period of time. With chronic exposure to capsaicin, neurons are depleted of neurotransmitters and it leads to reduction in sensation of pain and blockade of neurogenic inflammation. If capsaicin is removed, the neurons recover.

2008 Aug 18 09:17 PM

[dmnieren:]

What insurance company will pay for this?
I'm skeptical that payers view needlestick pain as a problem they need to reimburse for.

2008 Aug 20 12:53 PM

[hoopdreamer...:]

To the person who suggested lowering the cost, keep in mind, as you can imagine, a bulky device isn't cheap. I think they've said it costs $7-8 per device. I don't think it would be commercially viable at a 50% margin for example. As it stands I think they plan to charge $20/device, for a 60% margin.

2008 Aug 21 08:25 AM

[Amartha:]

I went to India for my hip replacement surgery. Actually it was not because of the money but endless wait that I had to do for my surgery at Charlottetown. I decided to do my surgery in India. I contacted a medical tourism company valuemedicare.com they were great. They helped me with everything. The standard of healthcare in India is much better than Canada and if you are suffering due to long wait time it is better to go there.

2008 Aug 25 01:38 PM

[sal bando:]

why are you posting this crap here?


On Aug 25 01:38 PM Amartha wrote:

> I went to India for my hip replacement surgery. Actually it was not
> because of the money but endless wait that I had to do for my surgery
> at Charlottetown. I decided to do my surgery in India. I contacted
> a medical tourism company valuemedicare.com they were great.
> They helped me with everything. The standard of healthcare in India
> is much better than Canada and if you are suffering due to long wait
> time it is better to go there.

2008 Nov 07 11:39 AM