A pharmaceutical company focused on the in-licensing and development of proprietary product candidates for the treatment of diseases and disorders in the fields of psychiatry and neurology.
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On my CAPS spreadsheet, the entry for Somaxon reads "Underperform if rising back above 0.5 on irrational optimism". Until today that is. Now it reads "Maintain underperform until bankruptcy". I was lucky to get another shot at Somaxon and I'd be surprised to see them clearing the 0.5 threshold again, barring a reverse split.
The catalyst that doubled the share price was a masterpiece of irony. Somaxon announced a settlement with generic drugmakers Par and MYlan that allows them to maintain patent exclusivity on their sleeping pill Silenor until 2020. Problem is, no one is buying Silenor, a spurious addition to an indication already crowded with generics. Silenor revenue the last four quarters was 6.2M, 3.7M, 3.9M, 2.7M. Not a trend that seems likely to result in positive cash flow. To Somaxon's credit, they were able to slow their cash burn by reducing SGA expenses by 75% over the last year (and 66% since the last quarter). However, I suspect they accomplished that by quietly dismantling their Silenor sales and marketing staff. With 8M in cash as of the end of Q1, I suspect management has given up on Silenor and wants to buy a little time before they decide whether to reverse split and dilute or simply give up the ghost.