Friday, October 31, 2014

C.K. Cooper starts Durect at buy

August 17, 2012 by · Leave a Comment 

C.K. Cooper has initiated coverage of Durect (NASDAQ:DRRX) with a “buy” rating and $3 price target, citing an anticipated “rebound in value we think may follow from Pfizer’s resubmission and FDA approval of the new drug application for Remoxy.” The stock closed at 95 cents on Thursday.

“We think the stock is poised for significant rally on positive developments for Remoxy over the next year,” writes analyst Ken Trbovich.

The FDA’s complete response letter in July, 2011 came with warnings from management at Pain Therapeutics and Durect that a response would likely take more than a year. “A year has passed and significant progress appears to have been made,” Mr. Trbovich said, adding that Pfizer expects to wrap up PK studies this quarter and meet with the FDA to discuss results in the fourth quarter.

“Thus, we think it is time to reconsider Remoxy and the potential it holds to drive value for Durect,” he said. “If all goes well, the NDA could be resubmitted, reviewed and acted upon in the next year, creating a major catalyst for Durect shares.”

Pfizer gained control of Remoxy, as a result of its acquisition of King Pharmaceuticals, just months before the second complete response letter from the FDA. This means Pfizer had no input on two previous NDA submissions for Remoxy.

Mr. Trbovich figures Remoxy could generate annual sales in the range of $400-million to $4-billion. “Yet, prices for Durect’s shares suggest capital market expectations for Remoxy remain low.”

In the hands of Pfizer, “we think Remoxy has the chance to garner significant share from market leader Oxycontin in a rapidly growing market,” he said. “If they do, the value of Durect’s royalties has the potential to drive Durect’s share price from four times to nine times current levels. We think the long-term rewards associated with Remoxy’s potential far outweigh the risks for investors able to tolerate the 50% downside that shares have if Remoxy is not approved.”

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