Joel,
At this point much depends on what the data tells Analysts and Investors. We may only get Top Line data from the trials prior to NDA filings, but if that Top Line information is extremely positive suggesting almost certain approval, the stock price could rise dramatically on that. On the other hand, if the Top Line info is solid, supporting the NDA filing, but if there still are questions in the minds of the experts as to whether approval is a sure thing, then the price gain may not be nearly as great, but I'd still expect a rise as the PFUDA date approaches.
In the initial case where approval is practically sure, the price prior to approval may not rise dramatically after approval as it's largely built into the price. On the other hand if approval is questionable, then when it occurs the price rises dramatically.
Of course approval is never really sure, and failure of a drug anticipating approval often provides tremendous opportunity when instead of approval you get delay. Look at companies like DCTH or DNDN, both have had delays in the approval process. DCTH will eventually probably get approved, DNDN obviously did, but the sales data recently disappointed and the stock's back to numbers not seen for months before approval. It's important to properly value what's being approved.
Solorel is a niche drug. The niche may grow if more people are found to have HGH problems then currently are anticipated. The company may make millions, or even tens of millions from the drug, but barring a miracle it's not a drug that will dramatically increase the share price.
Perifosine has tremendous potential IMHO. If over time several cancers gain approval for treatment with Perifosine, it could be a blockbuster drug many times over. If AEZS only had it in partnerships world wide, and if those partnerships royalties were just 10%, it could earn them hundreds of millions annually. Even if the O/S eventually exceed 100 million shares we're still speaking of dollars per share in earnings annually. If drugs like Solorel make enough money to offset other corporate expenses in developing other drugs, then the royalty and milestone earnings from a blockbuster can essentially be pure annualized earnings. With other drugs approaching approval I believe a company like AEZS warrants a P/E of 30, but much depends on market conditions. I like $$$'s in earnings with P/E's close to 30. Of course this all starts with approvals, note the plural, for real success a drug like Perifosine needs many of them, the first may be the most important, its earnings will fund many other trials and while not every trial it funds will be successful, each successful trial will dramatically add to those earnings.
It should be noted that only the first approval is needed for drug sales in any capacity. Once approved, drugs can be used off label for other applications, but if you want insurance to pay, their has to be some history of success. If Perifosine is approved say in Colon Cancer, if promising data is seen in say a Phase II in Prostate Cancer, a case can be made for its use and Insurance companies may pay. On the other hand if no data's been established for Prostate and either an Oncologist or patient was convinced it might help, it could be tried as long as someone was willing to pay for it. If successful it could add anecdotal information which can under the right circumstances gain approval or greatly speed the process.
Many investors get in before Pivotal Trials and out just before or after approval. Growth during this period can be tremendous, however, if a company has a large pipeline, and if the drugs approved have tremendous sales growth potential, the company may undergo tremendous growth for many years. I failed to buy AMGN in 1990 when it was about $15. When it split a couple years later I thought it had its run. It went on to split 3 other times that decade, a total of 48 to 1. Since that decade it's largely been dead money, but what a decade. I'm not saying that AEZS could have that big a decade, but looking at it's pipeline, with success in several bigger drugs, it could write the same sort of story if it's not bought out.
Gary
