Silenor is the key.
Hi everyone, I wanted to draft a brief summary of how I believe all the events surrounding Pernix will play out over the next few months.
First:
PTX received positive clinical trial data in July 2016 providing the needed safety profile to take Silenor OTC. IR told me that the plan was to continue to sell branded Silenor until the patent expires in 2020 then take it OTC. This does not make sense since current annual sales for the drug are approximately 14 million. Taking a drug like this OTC would potentially bring 100 million per year (conservative estimate listed in presentation from December 2016).
So the company is essentially losing 170million over the next few years by not applying for OTC approval.
Second:
All the sales positions listed over the past year have been pain reps (Trex and Zohydro). This is clearly the direction the company is headed from a sales perspective. Silenor does not fit into this model.
Third:
IR told me that Sedor tried to negotiate with the noteholders for Trex to get better terms for the company, the noteholders were unwilling to negotiate. The root of all Pernix problems lies with these Trex notes. Resolving these notes is likely needed before the company can be profitable or before the company can sell.
Fourth:
The holdcos have split drugs and associated debt/assets into neat packages. This is advantageous for what is about to happen.
Next Steps:
I believe the next step is for Silenor to sell to GSK. Without any further steps taken by Pernix (i.e. spending the money to file an OTC application) Pernix can leverage the value in Silenor to a company who has the means to take it OTC and make it successful. I believe it will go to GSK because of the legal judgement concessions made by the company. GSK could have driven Pernix into bankruptcy by collecting on the Trex judgement in full. Rather, they gave Pernix a very kind repayment plan and reduction in payment owed. There was likely significant negotiations involved in this. Also, in the February SEC filing associated with the judgement, Pernix allowed GSK to have final review of any asset sale (likely to give GSK the final bid on a purchase).
The sale of Silenor will likely provide Pernix enough money to pay off the entirety of the Trex notes (which will need to happen before the end of the year).
AI
