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Trius Therapeutics Predicted to Rise on Rival to Pfizer Antibiotic


The biotech has a drug candidate that treats tough staph infections and may be more convenient than the blockbuster Zyvox.

Trius Therapeutics (TSRX) announced earlier this month it has an antibiotic for serious skin infections that works as well as Pfizer's (PFE) blockbuster drug Zyvox. The market response: Trius' stock dropped 8%.

In the weeks since, the shares more than recovered and are up more than 90% on the year as some investors see a product that can compete well with Zyvox. Trius' product, tedizolid, is being tested for tough staph infections that can't be treated with an older antibiotic. Trius' drug, in the last of three phases of study usually needed for US approval, aims to be more convenient than the Pfizer drug and appears to carry less risk of side effects such as nausea, vomiting and diarrhea, according to the company's research.

Shares of Trius rose 3% to $7.25 in midday trading Tuesday.

Having appreciated so much in a 12-month span, can Trius' stock continue its sharp rise? Some analysts see the stock again almost doubling in the next year. And while there's no sure thing in the world of biotech, at least one analyst says the stock looks like a low-risk bet.

Trius' drug appears to be on its way to US approval (possibly in 2014), analysts say. Tedizolid is a product that requires fewer doses than Zyvox and appears to be slightly safer for patients, Zacks Investment Research analyst Jason Napodano says.

What's more, the company's research and development is being partially paid by German pharmaceutical maker Bayer, which would get sales rights for the product outside the large drug markets of US and Europe. Look for Trius to sign a European partner in 2012, bringing in more money to develop its drug, Napodano says.

"Where can you find a small biotech stock with as low a risk as this?" Napodano asks. He has a an $11 price target on the stock and predicts peak sales of around $750 million a year.

Napodano, who calls Trius one of his top stock picks, is actually below consensus estimates, according to one survey. Among the catalysts for the shares in 2012: A European development partner and release of full top-line data for its just-announced study. Also expect a possible financing deal to help fund research (a potential negative as there may be dilution of the stock). An additional late-stage study should be released by early 2013. Look for the company to apply for US approval in 2013.

The drug is designed to treat infections, including methicillin-resistant Staphylococcus aureus, or MRSA. The long medical name refers to staph infections that resist common antibiotics. Staph is a common bacteria that wreaks havoc on people with weak immune systems, including patients in hospitals and nursing homes.

The key to Trius' success, Napodano says, is getting its drug on the market before Zyvox begins facing generic competition (expected in 2015). The convenience of the drug may influence docs to prescribe it. In Trius' study, patients took two pills of Zyvox a day for 10 days. Trius' drug was taken orally once a day for six days. Zyvox can be administered through an IV and then via pills. The Trius study compared oral doses but the company also is testing intravenous dosing. Cubist Pharmaceuticals (CBST) also sells an IV-only drug to treat infections.

Pfizer's Zyvox had $965 million in sales through the first nine months of 2011.

Napodano sees as much as $400 million in peak annual sales in the US for Trius' drug, and about $300 million in Europe. There's potentially another $125 million in Asia where Bayer will have sales rights, he says.

Twitter: @brettchase

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