Pernix Therapeutics Holdings: No Zohydro? No Problemo!

PTX had a fruitful day in the market yesterday due to a PR that was released pre-market. It wasn't the acquisition PR that everyone was expecting (yet) but instead a statement that explained that due to a manufacturing issue, the 20mg Zohydro ER pills would be on backorder until at least Q1 2018. A couple of things raced around my mind: 1) Bankruptcy is completely off the table, otherwise why would they communicate such a forward looking statement? 2) Would the share price react negatively as a result of the PR? 3) Or was this a well delivered, strategic PR from John Sedor?

When the PR dropped, my initial reaction was that it would start a panic sell off. But then I pondered on the thought: If Sedor declared that there was no availability of the 20mg pills until Q1 2018, this represents two scenarios: 1) Demand is through the roof for the 20mg pills ( lets not forget the 11% YoY sales increase for the drug) 2) Sedor will likely deliver another stellar Q in terms of sales and EBITDA. It should be noted that the 10,15,30,40 and 50mg pills are still available, having zero impact on the shortage of 20mg. Obviously, your doctor will now prescribe you 2 x10mg pills instead of 1x20mg pill.

A supply issue would normally cause a drop in share price for most Biotech/Pharma companies, but instead this stock rebounded not once, but twice from a pump and dump as the stock recorded some wild price action during trading hours. A quick 10% gain in early morning trading was suddenly wiped out with someone dumping around 30,000 shares. Historically I thought PTX would slowly go red for the day, but quickly recovered and I must congratulate the stock on its formidable character in the eyes of short sellers and nay sayers.

Evidentially, this illistrates that this stock is the strongest it has been in recent times and represents a strong technical and fundamental basis for a long investment. It is plainly obvious that Sedor is working hard for shareholder value and I fully expect him to orchastrate and deliver a sale of the company to either GSK, Teva, Endo or Actavis by the 31st July. I think on behalf of all shareholders, I'd like to say how appreciative we are of John Sedor's actions thus far. With M&A on a 2017 hype, most notably the sale of CPXX to Jazz Pharmaceuticals for an extraordinary premium, I expect that anyone investing in PTX now will have one hell of a summer.