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Monday, October 26, 2020

Here’s The Scoop on Pernix Therapeutics Holdings Inc (NASDAQ:PTX)

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Pernix Therapeutics Holdings Inc (NASDAQ:PTX) has remained under heavy distribution lately, for the most part, despite executing a 1-for-10 reverse split that should ensure the stock maintains its listing on the Nasdaq exchange, thereby conforming to the exchange’s minimum bid rule. We last covered PTX stock just a few weeks ago, and have seen some interest kick up and a large single-day bounce to boot, so we thought it an apt time to review the situation.

As we held last time, market participants may want to pay attention to Pernix. PTX stock has a history of dramatic rallies. Moreover, the name has seen interest climb in the past month, with an increase in recent trading volume of nearly 350% in October, beyond what we have been seeing over the larger time frame. This should not be overlooked given the stock’s extremely small trading float of not even 7.8M shares. As savvy traders are well aware, a mechanically driven price squeeze can result from this type of mix of small float and ramping attention from traders.

Pernix Therapeutics Holdings Inc (NASDAQ:PTX) trumpets itself as a specialty pharmaceutical company that develops, manufactures, markets, and sells pharmaceutical products.

The company’s products comprise Treximet, a medication indicated for the acute treatment of migraine attacks in adults; Zohydro ER with BeadTek, an opioid agonist indicated for the management of pain; Silenor, a medication indicated for the treatment of insomnia characterized by difficulty with sleep maintenance; and Khedezla, a prescription medication for major depressive disorder.

Its products also include CEDAX, an oral cephalosporin used for the treatment of mild to moderate acute bacterial exacerbations of chronic bronchitis, middle ear infection due to haemophilus influenza, or streptococcus pyogene; Zutripro and Rezira for the relief of cough and nasal congestion; Vituz, a hydrocodone bitartrate and chlorpheniramine maleate combination oral solution for the treatment of cough and allergies associated with the common cold; and OMECLAMOX-PAK, a gastroenterology product.

The company sells its products through its sales force and third-party sales organizations, as well as through its subsidiaries. It serves drug wholesalers, retail drug stores, mass merchandisers, and grocery store pharmacies in the United States. Pernix Therapeutics Holdings, Inc. was founded in 1996 and is headquartered in Morristown, New Jersey.

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As noted above, the main result of the reverse stock split is that the number of outstanding common shares will be reduced to approximately 9.5 million.

Fractional stockholdings will be rounded up to the nearest whole number. The reverse stock split will affect all stockholders uniformly and will not affect any stockholder’s ownership percentage of shares of the Company’s common stock. The purpose of the reverse stock split was clear: to raise the per share trading price of the Company’s common stock to regain compliance with the minimum $1.00 continued listing requirement for the listing of its common stock on The NASDAQ Global Market.

In other words, as we see it, this was not about dilution. Instead, it was clearly about listing on the Nasdaq, and to that extent, should not suggest this is like many OTC stocks we cover that are into their 6th or 7th reverse split after piling up another mountain of convertible debt obligations for discounted conversion. In the PTX case, we would note that the company recently appointed John Sedor as Chairman of the Board and Chief Executive Officer.

We would also note that Mr. Sedor has been involved in a number of acquisitions as the selling party in the biotech space over the years. He has somewhat of a specialty in that department. Take a look at Cangene, or CPEX, or Bentley. They were all situations somewhat reminiscent of PTX. One cautionary note that provides a bit of an obstacle here is the high level of debt on the PTX balance sheet at present. But Mr. Sedor may have a plan to streamline things and get to an asset situation that works.

Now commanding a market cap of $30M, PTX has a significant war chest ($29.21M) of cash on the books, along with total assets a bit over $400M, which compares with an appreciable load ($303.87M) of total accumulated debt. The real question here is what the time frame is now for Mr. Sedor to try to work his magic, or if the PTX machine is amenable to such an operation. We would surmise that he had a view into the machinery before taking on the challenge, so some kind of strategic plan is probably in the works. We will continue to follow this one closely. For continuing coverage on shares of PTX stock, as well as our other hot stock picks, sign up for our free newsletter now and get our next hot stock pick!

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