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Accurate Time for Acura

Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Acura Pharmaceuticals (NASDAQ: ACUR) is a pharmaceutical company with a difference. On the company’s website the description makes it fairly clear why it is different.  The company is a specialty pharmaceutical company developing and commercializing tamper-resistant products to combat medication abuse and misuse. Acura attempts to achieve these goals through its proprietary “Aversion” and “Impede” technologies. These technologies involve the company adding inactive pharmaceuticals to a drug that render it fairly useless if someone tries to abuse it. The first two drugs developed by these technologies are OXECTA and NEXAFED, and it is both these drugs that make it quite an attractive option. So let’s take a look at the evidence.

OXECTA

OXECTA is an opiate painkiller that is the first immediate release oxycodone that is designed to prevent misuse. The drug is developed using Acura’s patented Aversion technology and is targeting to prevent abuse such as snorting and IV injections. The company is releasing this in association with Pfizer (NYSE: PFE). Pfizer noted that while the drug aims to stop potential abusers from crushing, chewing, snorting, or injecting the opioid, it does not deter oral abuse. Gail Cawkwell, MD and Vice President of Medical Affairs at Pfizer said that the technology causes the drug to break down into crumbled chunks instead of powder if crushed, and turns it "sudsy" if it is mixed with liquid and drawn into a syringe.

Under the terms signed with Pfizer, Acura received a $20 million payment in June 2011 when the drug was approved by the FDA.  Acura will also receive tiered royalties from Pfizer ranging from 5% to 25% on net sales of OXECTA. The partnership has resulted in direct payments for Acura to the tune of $78.5 million. These payments will continue when royalty payments for the sale of OXECTA start in February 2013, the anniversary of the first commercial sale of OXECTA.

According to research firm Frost and Sullivan, the U.S. opioid pain market management market generated revenues of $11 billion in 2009 and will rise to $15.3 billion by 2016. This rise in the size of the market is definitely set to benefit two of the players associated with the tamper proof drug. More physicians are likely to prescribe OXECTA as prescribing drugs susceptible to abuse would increase healthcare insurer costs. The only risk for OXECTA is if the marketing of the drug isn’t done well. This is something that rests with Pfizer, and something one would hope they do so that they can maximize the potential of the drug.

NEXAFED

NEXAFED is a 30 mg pseudoephedrine hydrochloride tablet formulation utilizing Acura's IMPEDE Technology and intended to be used as a treatment for nasal congestion associated with colds and allergies. An alternative is Sudafed which is released by Johnson and Johnson (NYSE: JNJ) is an over-the-counter drug. The drugs are susceptible to methamphetamine abuse. While some illegal methamphetamine is imported from foreign sources, domestic clandestine laboratories often make methamphetamine from cold and allergy products containing pseudoephedrine hydrochloride obtained from pharmacies.

There are three ways of converting pseudoephedrine tablets into methamphetamine. Two methods involve extracting, purifying and isolating the pseudoephedrine before conversion. The third is a one-pot method which eliminates the extraction process from the equation. NEXAFED was evaluated by a leading, independent clinical research organization using the one-pot direct methamphetamine conversion method. The study compared the amount of pure methamphetamine hydrochloride produced from NEXAFED and Sudafed tablets. The study revealed that almost twice as much methamphetamine hydrochloride was recovered from Sudafed. The “Impede” technology developed by Acura blocked the extraction when the other two ways were tested.

In addition to this, 164 independent pharmacists who were polled in a survey indicated they were likely to stock or recommend stocking NEXAFED in their pharmacies. 215 pharmacists said that they were likely to prescribe NEXAFED to people who complained of nasal congestion. This is definite good news for Acura and awful news for Johnson and Johnson with regards to this drug.

Conclusion

Acura has some great potential in the short term, but the tipping point will be the release of NEXAFED to the open market. Miss that date, and you’re probably going to miss the boat. The company has only a small sales and marketing team which could be an impediment for the smooth rollout of NEXAFED. However, the company has zero debt on its books, so it has the potential to ramp up if it wants to. Make your move fast, else this ship is going to sail.


ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services recommend Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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