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I am a long only investor that is on a mission to reinstate the uptick rule. The relentless short selling allowed by the repeal of that rule is the cause of many bear markets we have seen the last decade.
  • Zohydro Launch And Product Pipeline Provide Compelling Investment Opportunity 0 comments
    Mar 6, 2014 9:48 AM | about stocks: ZGNX
    1. Zohydro will have a monopoly in the single entity hydrocodone space due to the dosage issues of their competitors, TEVA and Purdue
    2. Relday is an early stage drug that has the potential to serve a market the size of 1% of the population of the United States
    3. Zogenix is backed by well-connected and well-funded individuals

    Zogenix (NASDAQ:ZGNX) is gaining attention and much fanfare with the launch of its first-to-market single-entity hydrocodone drug, Zohydro, occurred this month. Zogenix has made moves over the last 14 months from an all time low of $1.11 to a 52 week high breaching $5.

    The benefits of the new drug are obvious.

    Hydrocodone has always been paired with acetaminophen, and the benefits of limiting consumption of that molecule have been beaten to death, regarding liver toxicity. The drug features extended release and a lack of tamper deterrence, each property assuredly, like it not, will be in high demand in the pain space.

    Competitors TEVA and Purdue are having problems with their competing products. TEVA already failed to meet the primary efficacy endpoint for their initial phase 3 trials and the launch of their drug has been delayed. Purdue's drug stands no chance of making it to market in my opinion due to the dosage being far too light. Purdue's 120mg maximum allowable daily formulation is dwarfed by the TEVA 4x 45mg maximum dosage (that failed) and the Zohydro maximum dosage of 4x 50mg. If TEVA cannot meet the efficacy endpoint for pain relief with 180mg, how can Purdue with 120mg? Impossible. Furthermore members of all parties have stated that tamper deterrence is not a perfect science, the competition to Zohydro is likely to face problems with lesser bioavailability that proves them undesirable or even completely ineffective. Zohydro is likely to have a monopoly for the foreseeable future. Purdue, being a private company, has not released results from the phase 3 of their hydrocodone product. TEVA is in the process of retrial on their phase 3, but their likelihood of success is low. TEVA has been on the downswing for years, and it is unlikely that their second attempt will succeed. For this reason Zohydro will have a monopoly extending until patent expiration in 2019, at least. Zogenix could extend their patent runway with an abuse deterrent formulation. It is obvious the Zogenix's team is more conscious of the proper dose for opioid analgesics. I feel strongly that Zohydro's success will continue beyond patent expiration, they may very well have a monopoly for the next decade.

    As the only single entity hydrocodone drug, Zohydro plays a unique role. Hydrocodone is the first line opioid, being the weakest mu-opioid agonist by binding affinity currently FDA approved. This means that pain doctors will choose Zohydro first when treating pain patients. Hydrocodone is also less abusable than other opioids, it even has a built in mechanism that deters intravenous injection. Hydrocodone must be used orally in order for first pass liver metabolism to turn some of the hydrocodone in to hyrdomorphone. Hydromorphone has much higher affinity for the mu-opioid receptor and therefore it is less likely that we will hear stories on the news of addict shooting up Zohydro, simply because it is more effective to ingest it orally.

    Zogenix's management telegraphs strength. Still to date there have been zero insider sales of company stock. Institutions scooped up all the post approval shares at $2.25. Heavyweight funds Visium, Federated Investors, Baker Brothers, and Fidelity have reported increasing their positions last quarter. Anyone who has been following ZGNX knows that the management under promises and over delivers. Even Roger Hawley, CEO of Zogenix, had trouble holding back the excitement in his voice as he described the additions to the Zogenix team and their preparations for launch. From the start the smart money was betting on approval. A savvy investor could have still gotten in to ZGNX at a cheap price after Zohydro's OK, but if you haven't this is your last chance. We are about to blast off, it remains a fact that Zogenix management is backed by well-funded and connected institutions and individuals.

    Relday - Schizophrenia affects 1% of the world's population

    Many people think that Zohydro will be a blockbuster, and I agree. What you may not be aware of is that Relday has distinct properties that make it well suited for a device such as dosepro. Older antipsychotics strongly block a certain dopamine receptor, the D2 receptor, and this causes many side effects such as tardive dyskinesia. Tardive dyskinesia is a movement disorder. Patients receiving treatment with Relday will not be at risk for this horrible side effect. This alone saves Zogenix potential liability. Patients prefer risperidone, the active ingredient in Relday, for this reason. Based on Relday alone, having completed initial trials, I give ZGNX a strong buy not even taking in to account the massive sales from Zohydro. REGN added a once a month formulation of a drug that you used to have to take daily and the stock price rocketed from $4 to $300+. The patients taking Relday need it to have relief from the side effects of the harsh symptoms of their mental disorder. Relday will be the most convenient option as a pre-filled once a month subcutaneous depot injection.

    The Zogenix team is quoted as stating they are excited for the opportunity to market Relday. According to their website the injectable antipsychotic market was 4 billion on 2011. Relday, as a pre-filled, needleless anternative is sure to gain market share. The advantages for the physician is that there is no need to reconstitute the drug, the fear of needles in the patient is allayed, and steady state levels of risperidone are achieved on the first day. Risperidone is the most prescribed and more preferred antipsychotic and the depot injection advantages offered by Relday show a bright future for Zogenix.

    Patients and physicians will prefer this product for its ease of use and once a month dosing.
    The phase 1 proved that this product delivers stable pharmacokinetics, which is key in the world of schizophrenia. Risperidone is part of a new generation of antipsychotics that patients prefer. Older ones are dysphoric, but Risperidone gives the user a sense of wellbeing.
    Anxiety usually comes with the horrible disease that is schizophrenia. Relday provides much needed relief to these patients. Literally without using this product from ZGNX these people are stuck in a nightmare. With Relday these patients don't have to worry about taking a pill each day to function. This will improve patient compliance. Schizophrenics usually have a problem with disordered thinking, with Relday that will be alleviated.

    It is clear: The employee options have been finally all given away at a cheap price, and with the media blitz surrounding Zohydro has begun, the drug as of now is lining pharmacy shelves. There is nowhere to go but higher for ZGNX.

    Disclosure: I am long ZGNX.

    Stocks: ZGNX
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