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Our Readers Just Scored Big On AEterna Zentaris Inc. (USA) (NASDAQ:AEZS)

Our Readers Just Scored Big On AEterna Zentaris Inc. (USA) (NASDAQ:AEZS)
Written by
Chris Sandburg
Published on
December 22, 2017
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Back in August, we published this piece on AEterna Zentaris Inc. (USA) (NASDAQ:AEZS). At the time, the company had just collapsed subsequent to a substantial run and we said that markets were missing a strong potential upside catalyst in their evaluation of the stock. In turn, we suggested that – at then-current pricing – the company was a steal ahead of the catalyst in question.At the time of us putting forward that suggestion, AEterna went for around $2 a share.This week, the catalyst that we were looking at hit press and came in as overwhelmingly positive for the company and its shareholder. Markets are rushing to get into the stock as we write this (early morning session, US), with the stock peaking at around $3.06 shortly after market open.Here's what happened and what's next.The catalyst we were looking at was the PDUFA data for a drug called Macrilen, which AEterna had been trying to get approved in the US in a target indication of patients with adult growth hormone deficiency (AGHD). Well, that's not entirely accurate. The drug isn’t designed to treat these patients – it's designed to help diagnose the condition, subsequent to which (if the diagnosis is positive) the patient will start on a regimen of growth hormone booster therapy. AEZSThe PDUFA was slated for December 30 but, in a week when we've already seen the FDA green light three big-name drugs way in advance of their slates PDUFA dates, the news of an approval has hit press a little over a week early.And that's why AEterna is running right now – this drug could be a real game changer for the company.There are already some diagnostic processes in place for AGHD, so why is this a big deal?The current diagnostics platform for these patients is what's called an insulin tolerance test (ITT). Basically, a physician injects insulin into the vein of a patient and then measures blood hormone levels at regular periods subsequent to injection. It works, but it's potentially hazardous and it requires constant medical supervision.Also, anything IV is generally regarded as unfavorable if there exists alternative options, especially when we're talking about diagnostics (as opposed to direct therapy).Macrilen, on the other hand, is just a pill that the patient under investigation swallows. It's what's called a ghrelin agonist and it's designed to stimulate growth hormone receptors (which should, in turn, produce growth hormone). Once the patient takes the pill, the physician making the diagnosis measures the level of GH in their blood a few times during the hour subsequent to administration. If GH levels are still low, they've got AGHD.So it's neat, quick, accurate and it's a got a major advantage of the current IV standard of care in this space, what does this mean from a top line perspective?Every year in the US, somewhere in the region of 40,000 tests of this type (primarily ITT) are administered. AEterna thinks it can quickly attract around 50% of this market which, at current pricing, should translate to somewhere in the region of $70 million - $100 million annually.For a company with a market capitalization (even with the latest gains taken into consideration) of just $45 million, that's potentially a game changer.The company expects to launch the product during the first quarter of 2018, meaning we should start to see Macrilen's top line impact hit reports from (optimistically) the second quarter or (conservatively) the third quarter of next year.We expect to see the company continue to appreciate heading into launch but keep in mind that we may see AEterna raise cash (and, in turn, inject a bit of dilution into the stock) near term so as to bolster the balance sheet ahead of launch.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest on AEZS, sign up below!Image courtesy of NOAA Photo Library via FlickrDisclosure: We have no position in AEZS and have not been compensated for this article.

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