Somaxon Pharmaceuticals (SOMX) – Bear of the Day
Source: http://www.zacks.com/commentary/11142/Somaxon+Pharmaceuticals+%28SOMX%29+-+Bear+of+the+DayPosted on Tuesday, June 9th, 2009 | In Market Commentary, Stocks to Watch
On June 4, 2009, Somaxon (SOMX) announced that is has resubmitted the new drug application (NDA) to the U.S. FDA for Silenor (doxepin) for the treatment of insomnia. Despite this good news, we struggle to see how this drug can capture enough of the insomnia market to drive Somaxon to strong profitability.
The insomnia market is dominated by generic molecules, and without an onset claim, Silenor will already lose out on approximately half the market. Plus, Somaxon is running dangerously low on cash. We estimate the current cash balance is only enough to fund operations until July 2009.
Therefore, we expect a highly dilutive (30-40%) capital raise in the next week or two. We have a Sell rating on the shares and a target price of $0.50.Zacks Investment Research
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