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    AVANIR Plans Commercial Launch of Nuedexta; Drug’s Potential to be Proven in the Market

    The shares of AVANIR Pharmaceuticals Inc. (Nasdaq: AVNR) has nearly doubled on November 1 and closed the trading session at $4.80 after the company reported that its drug Nuedexta (AVP-923) won the FDA approval to treat pseudobulbar affect, a disorder characterized by involuntary, sudden and frequent outbursts of laughing or crying.  As of November 9, AVNR was traded in the range of $4.77 amid speculations on how big is the commercial potential of the newly approved drug and eventual takeover from a large pharmaceuticals company.

    AVNR is a biopharmaceutical company focused on bringing innovative medicines to patients with central nervous system disorders of high unmet medical need. The FDA recently approved Nuedexta, as the first and only treatment for patients with multiple sclerosis or Lou Gehrig’s disease who develop symptoms known as pseudobulbar affect that causes loss of emotional control. According to the company, Nuedexta represents a combination of quinidine, a generic drug that prevents heart arrhythmia, and dextromethorphan, a cough suppressant.

    Pseudobulbar affect concerns an estimated two million Americans suffering from multiple sclerosis, Lou Gehrig’s disease (ALS), stroke and other neurological disorders or trauma that can cause brain lesions.

    While there were talks of a potential takeout, the doubts concerning Nuedexta’s potential are strong. Analysts expect Nuedexta to garner peak sales of $350 million to $500 million over the next five years, big enough to interest a large pharma company. However, AVNR reported that it intends to bring the drug to the market alone and become a commercial enterprise. The announced transition would require a good execution, which AVNR obtained during 2010 by hiring Michael McFadden, a recognized managed markets leader with an impressive career with over 20 years of pharmaceutical commercialization experience. Moreover, the company’s  latest actions are suggesting that the takeover talks were rather futile.

    AVNR plans to launch the drug in the United States in the first half of 2011 and engage about 75 sales representatives for its marketing. The company is also planning to discuss the pricing for Nuedexta by the end of 2010, but estimated that the treatment could cost between $3,000-$5,000 per year.

    Going forward, we expect the company to slowly appreciate in anticipations of commercial launch of Nuedexta and driven by analysts’ optimistic estimates. However the first sales reports from 2011 would be critical to have a better understanding of AVNR’s potential.

    In addition to Nuedexta, AVNR has conducted a Phase III study of AVP-923 in diabetic peripheral neuropathic (DPN) pain where the primary endpoints were successfully met.  The company has also licensed macrophage migration inhibitory factor program to Novartis International Pharmaceutical Ltd. and has sold its anthrax monoclonal antibody program to Emergent BioSolutions. The Company’s first commercialized product, abreva®, is marketed in North America by GlaxoSmithKline Consumer Healthcare and is the leading over-the-counter product for the treatment of cold sores.

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