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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.
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.
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