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Pernix Therapeutics Holdings, Inc. Message Board

  • movumupout movumupout Jun 14, 2011 10:33 AM Flag

    Product sales tell all

    The product sales are stagnant to flat with DESI or unapproved products taking a toll. Cedax did grow to $2.5 million in sales, hardly enough to support the company long term with high cost of goods. Expect a $5-6 share price.

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    • Harumph, harumph. Movumupout, you seem to know what you are talking about. PTX and this whole layer of the specialty pharma sector are the walking dead. DESI business will go away almost entirely (with the exception of the pittance of undercover OTC products that move without any third-party or Medicaid coverage). The Cedax and head lice business -- that's going to be an uphill battle. Productivity at the rep level with these boat anchors will suffer.

      The analyst community had high hopes for high margins based on PTX's history. What they didn't understand was that historically PTX was getting huge productivity moving their Medicaid-covered DESI drugs. All that was required in that world was a sample drop and good coverage. The reps were glorified delivery wonks. Having to actually convince a doctor to write scripts for a third-tier antibiotic priced well north of $100/bottle is a much more difficult task. Sales and marketing costs go up, revenues flat to down, and the market turns on you.

      $5 to $6 is probably about right.

      • 1 Reply to macteague
      • A few telling signs.

        1) I talked to some docs about Cedax, every one of them said they wouldn't use it as a "first line" treatment for a child's ear infection. They all said that they would use amoxicillin first, which is less expensive and better tolerated. On top of that, they all said that there is at least 6 generic cephalosporins on the market that are all cheaper than branded Cedax! Cedax will never see the the type of growth the company is promising.

        2) In the two quarters that were supposed to be PTX's best, Q4 and Q1, they only did .06c and .04c, way below (66% below) analyst estimates. No matter how you look at it, or rationalize it, this company is way underperforming, largely because Cedax is underperforming. They say most acquisitions turn out to be a bust, Cedax is probably no different.

        3) The cold/ allergy products are completely generic (as in their active ingredients are not in any way unique, tons of products have the same ingredients!), in a highly competitive market and aren't worth much in a sale (or valued much in the stock price maybe 8 to 10x earnings, tops). Also, the cold products franchise is slowly decaying, and thats why the mgt team is anxiously trying to sign as many agreements they can to diversify its business. Because its bread and butter cold product line has been in trouble for awhile now. Expect stagnant to falling sales and decreasing margins on these products.

        4) Company has diluted shareholders over the last year by 20% by issuing stock, options, to employees, mgt, and even to do the Parapro deal.

        5) Insiders are lining up to sell their shares, usually a telling sign! Read last 8k.

        Not worth the risk/ reward here.

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