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Zalicus, Prime time Buying Oportunity

|Includes:EPIRUS Biopharmaceuticals, Inc (EPRS)
WOW what a crazy last few weeks it has been on the Zalicus boat. With the recent activity there is no getting around it; ZLCS has been hammered with the recent market volatility and unrest. But is it really ZLCS's fault?

I have been watching Zalicus for over 2 years now, back to the CRXX days and I feel that this stock is now more desirable than ever. Some points below to where I come to my conclusion.

The fundamentals are strong for a small bio-tech; the pipeline is well versed with multiple areas of development that look very promising.

Zalicus has almost 40 million in cash as well as a recently secured credit line to fully fund ZLCS through 2014. This has been confirmed and reiterated by the CEO and CFO multiple times in their many presentations.

Coming in the fall of this year ZLCS will advance their Ion candidates into
phase I. (Z160 N type Calcium Channel Blocker) & (Z944 T-Type advancing through Toxicology)

Zalicus’s CHTS (Combination High Throughput Screening) program as stated by the CEO Dr. Corrigan in their last presentation is “fully booked and looking to add additional collaborations at the start of 2012” .
 

Prednisporin (FOV1101) recently reiterated from Sanofi on September 6th confirmed the success of FOV1101 as is sits in Phase IIB with the estimated launch of product into market by 2015. This might seem like a long way away but if you look at normal timeliness for bringing a drug to market it is right in line with the commencement of Phase
III in the near future. I estimate the announcement for positive results from Phase IIB before February of 2012. This advancement going into Phase III will trigger a 3 million dollar milestone payment from Sanofi, tiered ongoing royalties as well as an additional 37 million dollars in milestone payments upon launch. I am very bullish on this. If you put the pieces together, Sanofi recently dedicated an extensive amount of time and cash on their ophthalmology division.  With the acquisition of Fovea pharmaceuticals as well as the recent partnership on the 15th of this month with Max Planck Society another ophthalmology group shows Sanofi’s continued interest in advancing there ophthalmology candidates to market. If you notice the second article below was released well after data from Fov1101 Phase IIB trial was completed. I highly doubt that Sanofi would be expanding their role with ophthalmology if there flagship drug Prednisporin (FOV1101) was a flop.

http://www.eurekalert.org/pub_releases/2011-09/m-mps091511.php
http://www.euronext.com/fic/000/063/255/632556.pdf

Synavive is a heavy hitter that is wholly owned by Zalicus with a huge market potential.  This drug recently went into Phase IIB studies a few months back with data expected mid 2012.

Exalgo royalties should ramp up in Q3 with the new distribution signings of
CVS and AARP as new selling partners.

In conclusion I see the sum of Zalicus as a huge positive from this current
PPS at $1.25. A Phase III announcement from Sanofi would blast ZLCS to a near $2.00 PPS. And the initiation of the new Ion Channel prospects into Phase 1 would put ZLCS back in the mid 2's with a very strong platform to grow from there.

I am long on ZLCS with my target price of $3.75 within 10 months.



Disclosure: I am long ZLCS.
Stocks: EPRS