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SOMX: be careful.

SOMX soared today because their low dosage version of doxepin has been approved for use in treating insomnia (using the name Silenor in the case of insomnia). I'm not that impressed by this announcement. Doxepin is a 60-year old drug (see http://en.wikipedia.org/wiki/Doxepin ) that is already prescribed off-label for insomnia. Because it went off patent decades ago, it is very cheaply available by generic prescription. As compared to Ambien or other current generation sleeping aids, it is not so habit forming. But its anticholinergic side-effects (constipation, dry mouth, excessive sweating, increased appetite, increased heart rate) can be a problem for some people. At the low doses that are being allowed by the FDA, this unlikely to be a problem except in very rare cases.

Doxepin can be a very effective sleep aid. But I just don't see much of a profitable line of business for SOMX since the same drug in the same doses can already by prescribed by any physician at a very low generic price. I can't see too many HMOs stepping up to buy Silenor at a high price.

From a technical perspective, SOMX may be a good trade for flippers, but this is not a company-making announcement. In fact, I'll be looking to short this stock if it trends much higher.