Avanir Pharmaceuticals (AVNR) skyrockets on rumors of FDA approval

A late-breaking report posted on TheStreet.com had Avanir Pharmaceuticals, Inc. (Nasdaq: AVNR) abuzz in after-hours trading Friday. The financial news website reported that the United States Food and Drug Administration (FDA) approved Avanir’s Nuedexta, a treatment for a relatively common, yet under-recognized neurological disorder known as Pseudobulbar affect (PBA).

Shares of Avanir were up 15 percent on Friday, in what has been a particularly rough quarter for pharmaceutical stocks. Before Friday, shares of Avanir Pharmaceuticals were down about 13 percent in the past three months.

In a statement, Keith Katkin, President and Chief Executive Officer of Avanir said “The FDA approval of Nuedexta marks an important milestone for people living with PBA, an under-recognized and debilitating neurologic condition. The approval of Nuedexta also marks Avanir’s transition toward becoming a commercial enterprise, ready to support the successful launch of the first FDA-approved treatment for PBA. We expect that Nuedexta will be available by prescription during the first quarter of 2011.”

Formerly known as AVP-923, is a combination of two-well researched components, the active ingredient dextromethorphan, and the enzyme inhibitor quinidine, which serves to increase the bioavailability of dextromethorphan. Avanir is developing Nuedexta for use in PBA and diabetic peripheral neuropathic pain.

Pseudobulbar affect (PBA) is a neurologic disorder characterized by involuntary crying or uncontrollable episodes of crying and/or laughing, or other emotional displays, the condition is also referred to as emotional incontinence. Research suggests that as many as 1.5 million and 2 million people may be afflicted with PBA in the United States alone, although, it is estimated that the number could be much higher due the prevalence of PBA in numerous neurological conditions.

Independent research firm for the healthcare industry, SummerStreet Research Partners predicted such an approval, on October 15. Analyst Carol Werther stated in a note to clients: “We expect a label to treat the signs and symptoms of PBA with warnings not to use with drugs that increase QTc wave prolongation,” the note stated. “Data from the advanced cardiac safety study (ACSS) indicates that AVP-923, even using a 10mg dose of quinidine, still prolongs the QTc (mean of 8.9 ms), just above the level the FDA considers no risk for Torsades de Pointes. (5 msec). Nevertheless, we do not think this will stop approval as many marketed drugs have similar profiles. AVNR submitted a risk map program to prevent abuse of AVP-923.”

PharmAthene, Inc. (AMEX: PIP) surges on rating upgrade, impending trial

Biodefense firm PharmAthene, Inc. (AMEX: PIP) shares have surged nearly 32 percent from Friday’s closing price after it was announced last week that investment-research firm WBB Securities upgraded its stock rating for PharmAthene to Strong Buy.

The rating upgrade was granted after the NYSE Amex LLC (NYSE Amex) stated last week that the Company made a reasonable demonstration of its ability to regain compliance with the NYSE Amex listing requirements and granted PharmAthene an extension until January 26, 2012 to demonstrate its compliance.

Contributing to the surging share prices, the United States government announced plans last week to spend up to $2.8 billion to strengthen its defenses against biological warfare. Anticipating a lucrative government contract to supply smallpox antiviral drugs, biodefense drugmaker SIGA Technologies, Inc. (Nasdaq: SIGA), is currently being sued by PharmAthene for terminating a merger agreement in October 2006. The trial, expected to begin January 2011, has analysts predicting a favorable outcome for PharmAthene, which would likely mean the company would be awarded a percentage of SIGA’s government contract. Roth Capital Partners analyst Joseph Pantginis said the contract has positive implications to PharmAthene that can now identify the exact measure of potential damages.

TheStreet.com’s James Altucher recently wrote that on the basis of this contract alone, Pharmathene would potentially make up to a billion dollars in cash earnings. “On this one catalyst I think PIP is potentially a $7 – $12 stock,” he stated in an article on October 15, 2010.

Another positive for PharmAthene is Valortim, the Company’s developmental stage anthrax vaccine which PharmAthene is positioning as a potential alternative to the existing vaccine EBS, that is administered to military personnel and individuals who work in high-risk environments. Anthrax is considered the Department of Defense’s No. 1 biological threat.

The US is required to have a stockpile of 75 million doses of vaccine. Right now, the only approved supplier of doses of vaccine is EBS, which has a long-approved first-generation vaccine that requires 5 doses over 18 months and costs $120 per dose.

According to Chief Executive Office, Eric Richman, PharmAthene’s second-generation vaccine requires 3 doses over 60 days and costs about $45 a dose. Government funding commitments exceeding $27 million have been awarded to-date for the advanced development of Valortim.