A -59% Return Since Transcept’s FDA Approval

When Transcept Pharmaceuticals (NASDAQ: TSPT) received FDA approval for its four-hour sleeping pill, Intermezzo, its stock was trading as high as $12.99 per share. Today, it trades at $5.23 per share. Needless to say, sales expectations for Intermezzo have not lived up to expectations; and as if a -59% return were not bad enough, the company recently told investors that Actavis, Watson filed for a generic version of Transcept’s Intermezzo, the flagship product of the company.

Investors were told to take solace in the fact that Transcept had filed legal action against the competition.

When shares were trading at $12.99, Intermezzo was the only Food and Drug Administration approved drug for middle-of-the night insomniacs. It was tested to be safe for consumption with only four hours remaining of sleep (as opposed to the typical sleeping pill’s eight hours). Today, at $5.23 per share, Intermezzo has become another commodity with diminishing ability to command high profit margins. Many other companies also make competing sleeping pills, including pharmaceutical giants Merck and Teva.

Finances at the company continue to reflect pre-approval status, including a steady cash burn, heavy spending on research and development, and minimal sales. Transcept lost $5.1 million in the second quarter of 2012 and generated only $500,000 in revenue. A conference call on August 13 also failed to impress investors; the stock fell over 10% by the subsequent week.

On May 15, Cowen  initiated analyst coverage of Transcept Pharmaceuticals with a Buy rating. On June 4, Leerink Swann also initiated analyst coverage at Buy/Outperform. Both analysts are underwater on their prediction.

Once playing a pivotal role in the demise of Dendreon (NASDAQ: DNDN) under a former corporate name, Novacea, newly-named Transcept Pharmaceuticals has shifted its focus from cancer towards the development and commercialization of products that address therapeutic needs in the field of neuroscience. After achieving FDA approval of Intermezzo in November 2011, the company continued to the next drug in its pipeline, a treatment for obsessive compulsive disorder called TO-2061.

Top-line results of TO-2061’s FDA Phase II study are expected in the first quarter of 2013. The study has enrolled 168 patients.

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Published by Donna Fago

I believe in writing content Informing investors with the knowledge they need to invest better today- I have been following the markets for many years and was asked to join the team at WallStreetPR.com recently due to my passion for the markets.