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Excellent Entry Point For Zalicus

|Includes: EPRS, Merck & Co Inc. (MRK), SNY

A great buying opportunity has presented itself in the past week for Zalicus (ZLCS). With pricing sub .75 cents compared to the recent high of 1.50, the upside far out weighs the downside; and my bet is on Zalicus bouncing strong.

Zalicus is a bio tech company that discovers and develops treatments for pain and immuno-inflammatory diseases. Zalicus currently has 50 million in cash which is enough to fund operations into 2014. There are currently 126 million shares outstanding.

Recently on September 10th Zalicus announced that Synavive; one of their lead candidates in phase II b trials failed to meet their target endpoints. Shares plunged to .72 cents and bounced to $1.08 in the same day. Zalicus as been trending down over the past two weeks to where is sits currently at .745 cents.

I see the current PPS as an excellent entry point for anyone looking to make a solid return. Currently the main catalysts for Zalicus are the Ion Channel Blockers Z160 and Z944. Both are completely unique forms of pain treatment that could potentially revolutionize the pain world.

The kicker for Zalicus is that this stock could explode any day. A simple announcement from a Giant Pharma like Merck (NYSE:MRK) announcing a collaboration deal for Z160 for 500 million dollars would easily double if not triple the stock in 1 day. Justin Rentz Zalicus' CFO has stated multiple times they have already had numerous partnership meetings with interested suitors. If the right amount is written on the check Zalicus would move. This situation is not far out of the question with the previous formulation of Z160 bringing over Half a Billion dollars from Merck back in 2006. Only one Ion candidate needs to hit and Zalicus becomes a blockbuster.

The other short term catalyst is Prednisporin (FOV1101) that is in the hands of Sanofi. (NYSE:SNY) They have completed phase II b trials months ago. The data is obviously good as they continue to highlight FOV1101 front and center in their pipeline chart as of most recently at the Bank of America conference on September 12th. Analysts are looking for a Phase III start by year end. This would trigger a 3 million dollar milestone payment with additional on going royalties and 38 million dollars in advancement payments.

Prednisporin phase III announcement would rocket Zalicus up well over $1.20 range in itself.

Covidien also recently announced the approval of the new 32mg dosage that will boost the Exalgo royalties for Zalicus substantially. The 3rd quarter results are eagerly awaited by investors.

You will also have a hefty bounce 31 days after September 10th from those who took losses and want back in.

I am long here and have a large position at .80 cents. The question you have to ask yourself here " Is Zalicus going to be over .75 cents as the Ion Channel advancements and Prednisporin come closer" That question alone answers itself.

Good luck and happy investing!

Disclosure: I am long ZLCS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.