This Small-Cap Biotech Just Hit its Stride

One of the most recession-proof industries is health care. No matter what happens to the economy people will always need medical attention – and new developments will always be in the works.

On Thursday, a small-cap pharmaceutical company, Pozen, Inc. (Nasdaq: POZN), soared after the Food and Drug Administration agreed to allow testing of two of its experimental drugs.

The stock is up over 50% in a week. Yesterday (Thursday), it was one of the top-five percentage gainers on the Nasdaq.

Pozen Inc. - Helping Those With Chronic Pain

Pozen is a drugmaker that creates new medicines to help patients with diseases that cause chronic pain. Its goal is to improve these patients’ quality of life by providing them with therapies that are more effective, safer and convenient.

The go-ahead by the FDA is huge for the company. Obviously, the success of its business is highly dependent on the marketplace value of its ideas and the related patents obtained.

But Pozen’s ability to obtain from the required regulatory agencies approval to sell the developed products, and its ability to find strong commercial partners to successfully commercialize the products, cannot be understated.

Pozen paired with AstraZeneca in August 2006 in order to license the product(s) and to collaborate in the remaining development and commercialization. Upon reaching certain goals, AstraZeneca has promised to pay them $345 million, what is being referred to as “milestone payments.”

Pozen’s PN 400 – Treating Types of Arthritis

One of its drugs, PN 400, will be used to treat various types of arthritis. The second, PA32540, is intended to give the same cardiovascular benefits as aspirin. Both are designed to help patients without developing ulcers that come from current drugs used.

These developments bode well for Pozen, which plans to file for regulatory approval of the two drugs – allowing it to then market and sell the products to those who would benefit.

There is a clear need in the drug market for a medicine that can relieve inflammation and help to manage pain – Pozen can fill that void. Given the roughly 20 to 30 million people who suffer from osteoarthritis, not to mention the millions of others with chronic pain, this product is likely to have mass appeal.

And according to Bill Hodges, Pozen’s Chief Financial Officer, “The acceptance of the filing would fetch us a milestone payment of $10 million.” That’s money in the bank for Pozen.

Pozen is pulling back a little this morning, and it’ll probably come down a little more in the coming days. Once the euphoria of FDA approval wears off, and the emotion gets driven out of the buying, serious investors can start looking at purchasing this stock before it makes its next big gains. And with the pipeline this company has, that could be considerable.

Source: Pozen Inc. (Nasdaq: POZN): Stock of the Day