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AVNR - Avanir Pharmaceuticals


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Avanir Pharmaceuticals (AVNR) is a small company with currently two products in the market.  Since Abreva has been on the market for a few years and not the main reason for being interested in the company I’ll skip discussing that one.

 

Nuedexta was approved by the FDA back in November 2010 to help with PBA.  The company began marketing the drug early February 2011.  Shortly after FDA approval the company raised 83 million in order to fund the launch of Nuedexta and help with additional add on indications for the drug.  The company currently has 119 million to help fund these operations.  It has been mentioned by management they have enough money to last till the end of 2012.

 

This is the only drug approved for PBA.

 

The drug has an open label and is a combination of two generic drugs and has a patent on the drug until 2025.

 

PBA market size

 

Only looking at estimates of moderate severe patients the population looks to be about 1.5 million people.  While others with less severe PBA may use the drug this isn’t taken into account.  Off label uses are also not considered in uptake.

 

In general, the launch of a new drug takes around 6 months to see how well a drug is doing.  Even blockbuster drugs normally take this amount of time. 

 

The cost of the drug is $5,800 a year and once rebates/discounts were applied the figure I used was $4,000 a year. 

 

In general a company can get up to a 10% market penetration in the first year.  For my calculations I used 5%.  75,000 patients 300 million in revenue.

 

In my opinion, the current price provides a level of safety from a total loss on the investment.  Will have to revisit this once numbers start being provided for actual uptake.

 

I am long in this stock 

 

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