I also calculated Q2 revenue. Based on April run rate, DEPO legacy drugs will generate about $36m.
For Nucynta, I assumed same number of prescriptions as Q1 which produced $44m then I added the price increase for almost 1.5 month or half the quarter which produced extra $10m. So the total revenue was calculated as $36m + $44m + $10m = $90m. Now if DEPO reps who are selling DEPO legacy drugs also started to sell Nucynta from early April then Q2 will be close to $93m to $95m.
Come on DEPO reps, please put some extra effort so the stock can undo Q1 shave. Meanwhile, it is not bad idea to burn some shorts too.
1- Nucynta works as well as Oxycodone for pain based on some research.
2- Nucynta works better for chronic back pain, diabetic and post-operative pain
3- Nucynta is less addictive compare to Oxycodone and other pain killers.
4- Nucynta has less side effect like nausea and vomiting compare to Oxycodone.
5- Both have release version but technology belongs to DEPO.
6- Almost same price now.
Oxycodone has generated $3.5B in 2011. It is belong to private company Purdue. The most reason for Oxycodone high sale is its marketing. That is the reason DEPO is going full force to sell Nucynta which is better than Oxycodone in many ways.
If Oxycodone produces over $3B per year then there is no reason a better drug like Nucynta to do less than $1B revenue per year.
I calculated Q2 revenue based on April run rates and these are the result
Zipsor (April run rate of $27), Q2 = $6.7
Lazanda (April run rate of $14), Q2 = $3.5
Cambia (April run rate of $30), Q2 = $7.5
Gralise (April run rate of $75), Q2 = $18.7
Total of legacy products for Q2 = $36.4m
To be conservative, let say legacy drugs produce $35 m.
Nucynta Q1 rev was $44m and if we assume a smaller number like $43 plus 30% of price increase instead of 44% then Q2 Nucynta rev will be $43 +$13 = $56m
So Q2 revenue will be $56m + 35m = $91m
The above calculations are extremely conservative and probably minimum at any circumstances.
The right number probably are:
$36.4m for legacy drugs as April run rate and $44m + $19.4m price increase for Nucynta = $99.8m
Q2 earnings will be a big surprise and some analysts will get a miss record in their predictions.
I am reading some comments by patients who are using Nucynta. Most active patients love it since they don't get kind of hangover like other pain drugs and they can continue their daily regular activities and work.
Here is one
"Awesome drug with no narcotic hangover. With radiation damage to all the organs that I still have, the pain never goes away. Nucynta (600mg/day has allowed me to have a tolerable life and work much better. Best medicine since vioxx (which was removed from market). My pain level is down to a 6 or 7 now. Very pleased. Much better than traditional opioids that cause highness, mental and go problems. Clear headed on this med."
"Switched a while back from Hydrocodone, tramadol, Soma in combination for many years to this Nucynta ER and IR. I take 2 ERs a day and one IR a day. I am thankful for Nucynta, it actually melts the pain away and keeps your mind awake. I don't have to take 8 hydrocodones a day 6 tramadols, and 2 Somas to get relief. I have been with my "new" doctor for about 8 months, and have been on this new combination for 5 or 6 mos. It is nice to only have to take a couple of pills instead of eating them like they are candy to get relief."
I look at earnings and net income have been negative for almost all quarters since the stock started to go up from low single digit price to current $32.
Revenue has increased significantly so does number of shares. Market value stands at almost $5B and most money to build it to this point came from selling shares. The company has almost 100m shares more that added almost $3.2B to the market cap.
A year ago, I switched from HZNP to DEPO and I think DEPO has same smart management like HZNP but more conservative that has kept the number of shares under 60m while increased the revenue significantly.
Bollinger Bands are opening, that means higher volatility and since all indicators are in downtrend then stock stays close to Lower BB around $5.72 as today and next week around $5.65 as Lower BB drops more.
That does not mean that the stock cannot go higher but it can rise to Mid BB around $5.91.
So, some funds are adjusting their investment. Usually, they sell some stocks at the end of the month and then buy others at the beginning of the next month.
So, one fund probably reducing SPPI but next week we may see some funds get interested in SPPI.
If there was any bad news, then the company would release it this morning with earnings announcement. It cannot release one news and let one sitting on side.
The herd mentality may hurt the stock short term but science behind the company will overrun any weakness. Bottom line is that the opportunity is created here and those who are taking advantage of it will win eventually.
I see BB is opening.
Low BB is sitting at $5.72 now and may drop further by next week.
Now SPPI is oversold short term and it will rebound back above $5.65 at minimum.
MA(10) = $5.98 **** Resistant
EMA(20) = $6.01 ***** Resistant
Upper BB = $6.11 ****** Strong Resistant
Mid BB = $5.97 **** Resistant
Low BB = $5.83 **** Support
So, there are tons of resistant around $6.
Now, all indicators are trending down.
New Trading range is $5.83 to $5.97.
MA(10) = $6.01
EMA(20) = $6.03
Mid BB = $5.99
High BB = $6.14 Strong resistant
Low BB = $5.84 Strong Support
SPPI touched $6.14 in past 2 trading days and could not hold it.
It also broke all indicators around $6.
Next stop is Lower BB at $5.84 to rebound.
Upper BB = $6.15, Resistant
EMAENV(20), upper band = $6.19, Strong Resistant
EMA(20) = $6.04 Support
So, SPPI got close to $6.19 but could not break it. $615 also could not be held. It needs to stay in this range with higher volume to be meaningful.
SPPI likes to move in a band since either it is controlled by some traders who try to squeeze a few pennies daily. For this reason, I put a few bands that SPPI likes to move. A band looks like a road and price is like a car moving in this road. Any time the car hits the road shoulder, it is stirred to the middle or the other side. Hitting one side frequently means the direction is forced to that side, either up or down.
EMAENV(10) = $5.85 - $6.15, the path on 4/20/15
EMAENV(20) = $5.88 - $6.19, today's path. It hit lower band and so rebounded to middle around $6.03
In general, the bands are slowing down downtrend and becoming flat and uptrend. This the sign of short covering and going long especially with current low volume.
Please sell if you cannot handle the company improper behavior.
But if you want to make good money, you have to have patience and reason to hold SPPI.
For me and many others, SPPI is undervalued by every measure and as days passes, this fact becomes more highlighted. On the other hand, time is in favor of this company.
Now, you may argue that Raj and management are bad. All are true but this fact cannot change SPPI value. In my past experience, companies with this characteristic will be bought out eventually. If SPPI was normal then you have been paying double digit price for every share.
Take advantage of this fact and put some shares aside and forget day to day price changes unless you just look at them for fun.You will be happy in a year or two for those shares.
Joe, I know that. I just put that statement for nervous trades who think they should double their money in one week.
I am telling them what is $6 per share for a company worth billions.
SPPI can go private at any time and if you think about, Raj is over 70 and he does not want to die behind his desk. So, who knows, he may be negotiating a deal at this moment and he wants no news out until all it is done.
SPPI can be acquired the same as AGN was acquired even with poison pill.
As soon as some signs of more progress, SPPI will be an acquisition target.
Pay off bondholders with current cash, the rest can be sold at prices much higher than $400m.
Put it at auction and start the bid at $450, the price may reach $650m and higher.
Have some patience. In the worst situation, company will be for sale. Say it will be at the end of 2015 when SPPI has 6 drugs in the market and only $150 m of revenue. In this case, many companies, even small ones would love to pay 3 times or $450m and get the pipeline and cash left as a bonus.
There are just a few factors and the most one is day traders who are sucking the SPPI blood by obvious manipulation of shares.
The pattern is very obvious.