Positive Momentum Continues for NeurogesX

NeurogesX (NGSX) stock has been on a tear lately. With the drug now approved in Europe and nearing approval in the U.S., the market is clearly coming to grips with the power of Qutenza.

Even though the shares are up over 100% since the beginning of the year, several significant catalysts remain. We expect the company to secure a pan-European commercial partner for Qutenza in the next few months. U.S. regulatory approval will probably be delayed until November 2009, but management should be able to quickly complete and file the 20-patient topical anesthetic tolerability program in July. Upside could come if the FDA does act positively in August.

And finally, we expect Qutenza to become available in both the U.S. and EU in early 2010. Peak sales in the PHN indication are at least $250 million, with upside to that figure based on off-label use in HIV-DSP and PDN.

Given all these potential driving forces for the stock, we see the stock fairly valued at $9 per share.

NeurogesX stock is thinly-traded and, as a result, highly volatile. We like the name, but we urge caution when establishing a position. We are now at a `Buy’ recommendation, but note this recommendation is for only the investors with a high risk-tolerance.

The best way to establish a position in the name would be to do so slowly, over a long period of time, because in the long run we are confident in the strong future profitability of the company based on Qutenza.

Read the full analyst report on “NGSX”
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