Source: Bloomberg
It’s rare to find a penny stock trading under $1 that has a large institutional shareholder base. It’s even rarer when you have a billionaire like Steve Cohen adding to his position. In a 13G filed on April 29, 2016, Steve Cohen’s family office (Point72 Asset Management LP) had increased their position in Pernix Therapeutics from 2.5 million shares at the end of the first quarter, to 3.77 million shares on April 28, 2016. Does Steve Cohen know something that maybe we don’t?
According to Yahoo! Finance, 59% of PTX shares are held by 124 institutions. This is a strong institutional shareholder base for such a tiny company. PTX’s major shareholders include Broadfin Capital, Morgan Stanley, venBio Select Advisor, Stonepine Capital Management, Elk Creek Partners, Aisling Capital, Vanguard, and BlackRock.
Pernix Therapeutics Holdings is a specialty pharmaceutical company focused on the sales, marketing and development of branded and generic pharmaceutical products for sleep, bacterial infections and cough and cold conditions. The company has a list of branded products including Treximet, Zohydro, Silenor, Khedezla and Cedax.
Last month, PTX announced that the United States Patent and Trademark Office has issued U.S. Patent Numbers 9,339,499 (‘499 patent), 9,326,982 (‘982 patent), and 9,333,201 (‘201 patent), covering important safety information related to dosing patients with Zohydro ER with BeadTek. These patents, in addition to the 9,265,760 patent (‘760 patent) which issued February 23, 2016, are broadly directed to a method of dosing patients with hepatic impairment with hydrocodone where no adjustment in start dose is needed for patients with mild or moderate hepatic impairment. The ‘760, ‘499, ‘982 and ‘201 patents expire July 25, 2033. Interim CEO John Sedor said:
“The ‘499, ‘982, and the ‘201 patents, solely owned by Pernix, are a significant addition to the Orange Book, bringing the total number of Orange Book listed patents covering Zohydro ER with BeadTek to seven. We continue to invest in this brand and currently have a half dozen more patent applications pending relating to Zohydro ER with BeadTek.”
Last week, PTX announced positive final results from a Phase IV Study assessing the effects of nighttime administration of insomnia treatments, Silenor 6 mg and zolpidem 10 mg, as well as placebo, on arousability, gait, balance, and cognitive performance, after going to sleep, in healthy male volunteers. These data were presented at the SLEEP 2016 International meeting, which took place on June 14th and 15th in Denver, Colorado. The study assessed the effects of a single dose of Silenor 6 mg compared with matching placebo and a single dose of zolpidem 10 mg compared to its matching placebo at the respective Tmax (time the maximum serum concentrations are observed) in normal healthy adult male volunteers (n=52). The results of the study demonstrated that Silenor 6 mg was statistically superior to zolpidem 10 mg on the measures studied – arousability, gait, balance, and memory.
The results also indicated that subjects taking Silenor 6 mg did not have impairment on arousability, gait, balance, and cognitive performance, and were comparable to placebo. Further, in addition to Silenor 6 mg, both placebo groups were also statistically superior to zolpidem on the measures evaluated, indicating that zolpidem subjects had statistically significant difficulty in waking up, with walking and balance and with memory. Finally, there were no differences in efficacy measures between zolpidem 10 mg and Silenor 6 mg, while several measures were significantly improved with Silenor 6 mg versus placebo.
Currently trading with a market cap of $30 million, PTX is a compelling risk/reward opportunity. Interim CEO John Sedor has a history of being with companies just before they’re sold. He was successful with Cangene, CPX and Bentley. Furthermore, we think institutions will be pushing for an exit to recoup some of their money. While we’re not sure on a price, we can safely say a sale would be at much much higher prices. With Steven Cohen putting fresh money to work in PTX, it’s better to go with the smart money on PTX and be patient. Good things are bound to happen.