I have tentatively scheduled an interview with Adrian Adams, CEO of ARLZ, for late Monday afternoon and hope to publish an updated article on ARLZ mid to late next week. It's certainly been a brutal week for ARLZ shareholders.
I am encouraged by seeing the insider buying which was disclosed in SEC filings late this afternoon. Adrian Adams (CEO) bought 500,000 ARLZ shares on March 15th; Andrew Koven (President) bought 20,000 ARLZ shares on March 15th etc.
I did have a brief chat with Adrian Adams a couple of days ago and he confirmed that Deerfield remains fully committed to ARLZ. They are owed some $275M and are a significant shareholder. In my view they effectively control ARLZ and have had a very long and profitable relationship with Adrian Adams over the past 4 pharma deals they have invested in which Adams led.
Investing in earllier stage pharma and biotech can be very volatile. They typically are high reward/ high risk investments. Analysis are based upon trying to assess probabilities of success; there can be a lot of factors which can derail an investment; sector sentiment, general markets, competition, patent issues, etc.
ARLZ (formerly Pozen) has traded as high as $12 and as low as the low $2s this week since the day that Tribute announced its merger with Pozen in 2015. This week has been a low point and clearly the earnings call on Monday morning did not go well. Having said that I believe it would a mistake to bet againt Adams. Am I guaranteeing success? Absolutely not. But quality and track record of management matter. I've spoken to a number of the large ARLZ shareholders this week and various biotech/pharma experts.
They seem confident. Yosprala sales to date have been disappointing (but still early days). Zontivity is the likely major upside for ARLZ. Following AstraZeneca's failed trial for the treatment of peripheral arterial disease (PAD) announced in October, 2016, Zontivity may actually be the only branded approved drug for that treatment in patients with MI. Adams has not provided guidance as to Zontivity's peak sales potential but it could be significant (and much larger than Yosprala).
Zontivity is being re-launched in June, 2017. It is a once a day pill to be taken with aspirin. Coincidentally Yosprala is low dose aspiring (with time released omeprezole for patients who may have GI issues taking aspirin). The two are nearly a perfect fit and will be marketed to the same cardiologists and high prescribing physicians. Is there a guarantee that Yosprala will be a hit? Absolutely not.
Last year I did very well investing in RLYP (even wrote an article about it on SA) which obtained FDA approval for and then launched a drug treating hyperkelemia. Estimated peak sales were over $1 BB and the company was bought out at a very healthy price. Sales of the hyperkalemia drug have since been a disappointment for the new buyer. I mention that because execution of a commercial sales launch and effecting market share penetration don't always work out the way marketing studies (even very extensive marketing studies) might otherwise predict.
I remain long ARLZ with a very significant position. I did consider adding to my position this afternoon but thought my ARLZ position is already very large for the size of my portfolio. It is currently my second largest holding.