Some DSCO thoughts

As I count them, DSCO has about 60 trading days to go before its PDUFA date. It is trading beneath its 50 day MA and recently put in a 52 week low at $1.57. So I think it has time and room to make a move (hopefully to >$2.00) in the coming weeks.

DSCO is seeking approval for the use of its candidate, Surfaxin, in the prevention of respiratory distress syndrome in premature infants. Surfaxin is a synthetic surfactant. Currently available alternatives are animal derived.

The company received a CRL in April 2009 – their 4th for this drug. The CRL focused on a quality control and stability test. The complete response to the CRL was submitted in September 2011 and the company received a PDUFA date of March 6th 2012.

Company has a market cap of $44M with ~$15M cash on hand. Burn rate is ~$5M per quarter and management has said they will not be raising capital before PDUFA. Stock recently set a 52-week low at $1.57. Today started strong on news about efficacy of ventilator equipment the company is developing.  Price rose to hit $1.88 and then fell back off. It has hovered around yesterday’s close since then.

I remain long DSCO with a break-even stop and initial profit target of $2.00.


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