Trius Therapeutics, Inc. (NASDAQ:TSRX)

smolinaroli (< 20) Submitted: 8/22/2011 2:05:29 PM : Start Price: $6.48 TSRX Score: -23.96

The bullet is.

1)Lead drug in Phase 3 is an improved version of the market leading antibiotic to fight resistant staph infections. Phase 3 data expected early 2012. Two trials underway both received FDA SPA. Which is basically a fast track for approvals conditional upon the trial meeting its endpoints.

2)Cash on hand is sufficient to complete Phase 3 trial.

3)Asia/Japan marketing rights sold to Bayer for $25 upfront + $69 M in milestone payments + 25% of all development costs going forward + 100% of asian development costs + "double digit royalty"

4)Drug is an improved version of a top tier antibiotic targeted MRSA. Major competitors are Zyvox (PFE) and Cubicin (CBST) with about $600M annual each.

5)Current valuation = $150M - cash = $100 M for enterprise. Assume peak revenue = $750M with 20% Net Inc. = $150 M annual income at peak. Even assuming a 50% risk of failure for the phase 3. That still looks good.

6)Near term upside catalysts include: a)signing a European marketing deal, b)signing a US marketing deal, c)acquisition

7)Near term downside catalysts include: None

8)Basically, MRSA doesn't care what credit rating the US has.