Tiny Biotech Javelin Pharmaceuticals Looking to Crack Pain Killer Market

From BioHealth Investor

by Andrew Vaino

Javelin Pharmaceuticals (JAV) is a tiny biotech focused on drug delivery. Their lead compound is Dyloject, an injectable form of pain-killer diclofenac. One of the problems with injecting diclofenac, a currently used non-steroidal antiinflamatory drug, is it’s just not very soluble in water; that is, you need to use a large volume to get it injected. By mixing diclofenac with isopropyl-modified -cyclodextrin, a circular carbohydrate molecule composed of seven glucose units, Javelin is able to achieve a higher concentration of diclofenac. I should note I have some bias here, as cyclodextrins (along with adamantane) are among my very favorite molecules.

Higher concentration makes for less disruption in delivering the drug intra-muscularly, and speeds the time it takes the drug to start working. Faster relief from pain is never a bad thing. Dycloject has been submitted for regulatory review (MAA) in Europe. Unfortunately, the European regulatory body is less transparent than the FDA is setting dates when decisions such as this will be rendered. Dycloject is currently in a Phase 3 clinical trial in the US.

Last May the company began a Phase 3 study on an intranasal formulation of morphine. Again, the selling point here will be substantially faster absorption of the pain reliever. Anyone who has had any type of post-operative or dental pain can appreciate that minutes can pass like hours.

Javelin has also completed a Phase 2 study of use on intranasal ketamine for pain relief. This research was sponsored by the U.S. Department of Defense. If they can secure a contract in the future with the DOD it will mean big bucks, but this is in no way assured.

To be clear, these guys aren’t creating great new drugs, they’re taking well-known drugs and tweaking them a bit. While this approach doesn’t guarantee success, it’s always easier dealing with known drugs.

I think this is a good small company with some useful products. This stock is a bit on the illiquid side (average 10 day volume is just under 140K). The pain market can be a tough nut to crack, but at $20B in annual sales it’s also a pretty big
market. And remember, they’re not trying to introduce new drugs, just modified forms of existing drugs. None of Javelin’s drugs is likely to be a blockbuster, but that’s ok. It’s a small company, with a market cap of $200M. News of approval in Europe, or a positive result from either of their Phase 3 clinical trials, will give the stock a nice spike.

This company has a weak balance sheet and will incur greater and greater expenses as they proceed with their two Phase 3 studies. With the stock near its all-time high, and with no possibility of revenue in the foreseeable future, it’s a safe bet there will be a follow-on offering of stock in the near future. My take is after the inevitable drop in price on this dilution will be a good time to buy.

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