Acura Pharmaceuticals' (NASDAQ:ACUR) after hours press release on Friday the 27th was a huge disappointment for existing shareholders and resulted in a substantial selloff in late day trading with the final trade at $1.51, down almost 51% from its $3.08 closing price. Existing and potential shareholders should take note that the company had mentioned in the write-up that earnings that were to be announced on August 8th have been scheduled for after the markets close on Monday July 30th. A subsequent conference call is scheduled for Tuesday, July 31st at 8:30 a.m. to discuss the company's financials and the return of three of its products in development from Pfizer (see below).
The late day announcement was pertaining to a change in terms with Pfizer (NYSE:PFE) over a licensing agreement with Acura over its Aversion® technology. The company announced that it had received notification from Pfizer on July 26th that it was exercising its rights to terminate the license for three development stage products utilizing Acura's Aversion® technology. Pfizer would retain and market a fourth product, OXECTA®, (oxycodone hydrochloride) that it plans on retaining the rights for and market under the license agreement. Aversion® is patented by Acura and imparts abuse deterrent features to orally-administered drugs and helps prevent abuse by inhalation or injection.
In June of 2011, Acura announced the FDA's marketing approval for OXECTA® using their Aversion technology. A subsequent press release on July of 2011 announced that the company had received a $20 million milestone payment from Pfizer due to the marketing approval, a huge boost to the company's financial shape. Acura should start receiving additional payments in the form of royalties in 2013 on the net sales of OXECTA, helping not only to additionally shore up the company's financials, but also legitimizing the company's Aversion® technology for licensing out to other entities.
In the afterhours press release from this last Friday, Acura's President and CEO, Bob Jones, stated that they:
...Will evaluate our strategy for these products over the coming months, including possible partnering with alternative strategic partners, and will work with Pfizer to exercise our rights under the Pfizer Agreement for the transition of these products back to us.
The afterhours closing price of $1.51 reduced the market capitalization to under $70 million and may represent a good investment for new shareholders as the company's common shares have never closed below $2.00, even well before their June 2011 Aversion marketing approval. In the 1Q 2012 company financials, Acura stated that their balance sheet is strong with $33.5 million in cash and cash equivalents with no debt on their balance sheet, a phenomenal accomplishment for a sub-$100 million market capitalization small pharmaceutical company.
Not a "one trick pony", Acura does have another product in its pipeline to address drug abuse. Their NEXAFED product is designed to deter the conversion of pseudoephedrine into methamphetamine by greatly complicating the extraction procedure of the commonly-used but now heavily-regulated active ingredient in many decongestants. Although still in development stages, regulatory success in marketing NEXAFED would be a huge boost for the company and represents a large market for the company with other licensing deals likely coming soon thereafter.
Current and potential shareholders should listen in on the conference call on Tuesday, July 31st at 8:30 a.m. and are advised to participate in the question/answer section. According to Friday's press release:
To participate in the live conference call, please dial 800-967-0627 (U.S. and Canada) or 913-981-5535 (international) five to ten minutes prior to the start of the call. The participant passcode is 8419237. A live audio webcast will also be available through the "Investors" section of the company's website, www.acurapharm.com.
Disclosure: I am long ACUR.