Zalicus Is Locked And Loaded: What You Need To Know

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I have been following Zalicus (ZLCS) for three years now, and I am still amazed how this stock has been punished and not rewarded for its advancements. I believe this stock is ready to burst in the coming months with huge top line data expected in September of this year.

A brief overview of the company, at the end of the 1st quarter of this year they had 52 million in the bank. There are 113 million shares outstanding with their projected cash burn for the next year of roughly 10 million per quarter from the multiple ongoing trials and advancements in their pipeline.

The big milestone for the Zalicus is Synavive for near term accomplishments. Synavive is a treatment for Rheumatoid Arthritis comprised from the synergy between Dipyridamole and Prednisolone that will delay the side effects from long term steroidal use. It is highly anticipated for the cost saving benefits that it will provide to its patients to postpone the introduction of an extremely expensive last of the line treatment called biologics that costs roughly $20,000 per year. Synavive will also open a market to countries that currently do not have the capability to administer biologics like Russia, India, and China. With the oral dose Synavive projected to cost consumers around $2000 per year, this drug will be in the market by itself creating a lucrative long term money-maker for Zalicus. Synavive is currently in a Phase II b study with top line results eagerly awaited in September of this year. This drug alone, if top line data is positive, should move Zalicus well over 2.00 per share.

Z160 in itself is a global changer if approved. There has not been a new pain drug introduced to the market in over 30 years. This drug was originally partnered with Merck (NYSE:MRK) years ago before it was de-prioritized and given back to Zalicus because of solubility issues in clinical trials. Zalicus has addressed those solubility issues and is extremely excited with the results thus far, with 6 fold improvement in bioavailability in phase 1 PK study compared to the prior Merck formulation. Zalicus will have two Phase II a studies to start in the 3rd and 4th quarter of this year, and top line data expected late 2013.

Some other points that need to be addressed briefly are Prednisporin (FOV1101) partnered with Sanofi (NYSE:SNY). Prednisporin has been reiterated by the CEO of Sanofi 5 times in the last year stating a 2015 launch of Prednisporin for the treatment of Allergic Conjunctivitis. A phase III start would trigger a 3 million dollar milestone payment from Sanofi as well as an additional 37 million dollars upon approval with ongoing tiered royalties from sales.

Covidien (COV) stated that they will pursue the approval of the 32mg dose of Exalgo in the second half of this year. This will answer investors' concerns over ongoing royalty revenue. If you do some quick research for Exalgo reviews you will find that many patients are already being prescribed 2 16mg pills daily for pain relief. This new 32mg dosage will take the lion's share of the market and exponentially increase royalty revenue as well as keep the generic from Watson Pharmaceuticals (WPI) from deteriorating Zalicus's revenue stream from Covidien.

Disclosure: I currently hold shares of Zalicus and I am long with a price target of $3.00 within the next 6 months with positive top line data from Synavive