Adolor Corp (ADLR)

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Adolor Corp.: A Biotech Where Pain Is Its Gain, And Patience Pays

Adolor Corp. (ADLR) (1.76) is a tiny biotech that has a pain management focus. Its specialty is opioid receptor-targeted receptor therapeutics. It has been a name on our Emerging Growth list since late January, when the stock was trading at 1.50.

According to the corporate website, ADLR markets ENTEREG a peripherally-acting mu opioid receptor (PAM-OR) antagonist designed to block the adverse side effects of opioid analgesics on the GI tract without blocking their beneficial analgesic effects. The FDA approved ENTEREG in 2008. The drug accelerates upper and lower gastrointestinal [GI] recovery following partial large or small bowel resection surgery with primary anastomosis. ENTEREG is the first FDA approved therapy for postoperative ileus and is available for short-term use in hospitals registered under the ENTEREG Access.

ADLR co-markets the product with GlaxoSmithKline (GSK) and in the third quarter the company reported seeing continued growth in shipments and product sales. Last week, the company reported ENTEREG annual sales of nearly $15 million.

The company also reported 800 hospital formulary wins for the year, up from 300 in 2008. Of these hospitals, at least 450 of them are a part of the 1400 hospitals nationwide that account for 80% of the bowel section surgeries.

I do see continued growth with ENTEREG, but I also believe the company’s greatest story may yet to be told. Its partnership with Pfizer Inc. (PFE) in the development of a new class of opioids --- the delta receptor opioid. This class of opioid analgesics would work effectively in pain management without offering numerous complicating side effects that the traditional opioids retain such as sedation, respiratory depression and abuse potential.

Management has reported progress in a Phase 3 trial involving the compounds AVL5859 and AVL5747 in osteoarthritis patients. The trial will enroll 400 patients and compare each compound against placebo and oxycodone CR. The study will last two weeks and results are expected at the end of this year.

Additionally, ADLR is preparing for the initiation of an additional Phase 2a study of ADL5747. This will study a patient with postherpetic neuralgia to assess its efficacy in controlling neuropathic pain. Enrollment was scheduled to start this study last month.

Adolor Inc. sports a $85 million market cap and has 46 million shares available. It also is in a very enviable position with liquidity, sitting on nearly $85 million in cash. Insider ownership is around 13% and just recently, in January, Wellington Research Management more than doubled its stake in the company (going from 4.6% to 10% ownership).

The stock had a nice run the past few days, but there should be plenty of upside left. If the market struggles, ADLR will stumble with it. Patient investors, however, could be rewarded.

Disclosure: Long ADLR
http://seekingalpha.com/article/191639-adolor-corp-a-biotech-where-pain-is-its-gain-and-patience-pays?source=yahoo