PropThink contributors Jason Napodano and Dr. Aafia Chaudhry laid out the full bull thesis in December of last year, and they see fair value for TSRX at $12. Clearly there’s upside to be captured, and while Napodano doesn’t necessarily expect Trius to partner tedizolid in the U.S., we think there’s good reason for Pfizer to be eyeing tedizolid -- and Trius as a whole. Pfizer’s Zyvox (linezolid) goes off patent in two years (three years in the EU), and now that tidezolid has demonstrated non-inferiority in ABSSSI and a better dosing profile, it makes a compelling asset through which Pfizer might cannibalize Zyvox sales in the indication. Both drugs are oxazolidinones, de-risking tidezolid as a potential treatment for lung infections (where Zyvox already has labeling), and tedizolid has a differentiated dosing profile (once daily for 6 days, vs. linezolid’s twice daily for 10 days).
Note that there’s already a natural link to the large pharmaceutical company: Craig Thompson, Trius’ Chief Commercial Officer, formerly led Pfizer’s Zyvox commercialization efforts as VP of marketing for Pfizer’s specialty care unit. And, CEO Jeffrey Stein, Ph.D, sold his former anti-infectives company, Quorex Pharmaceuticals, to Pfizer in 2005. We wouldn’t be holding TSRX on the basis of an acquisition alone, but the possibility offers a nice backdrop to the strong fundamental story at Trius.
Again, we believe that the weakness in TSRX is only temporary, a result of either Ayer’s wind-down or rumors of such. As we’ve said before, TSRX is undervalued. A break below the 50D MA at $6.36, just below Wednesday’s closing price, may send the stock as low as its 200D MA at $5.63, in which case TSRX is at fire-sale prices. The next expected catalyst for Trius is a European partnership announcement; tedizolid is already partnered with Bayer in the Asia-Pacific region.