Now that Acerus Pharmaceuticals is receiving some initial attention from investors including its first research coverage in years, I’m getting calls and social media messages from interested investors asking what we think. I guess that many of these people remember that I wrote several blog posts on Acerus (nee Trimel) founder and former largest shareholder Eugene Melnyk and ultimately wrote about the company itself.
In answer to your queries, yes we like the Company and yes we like the stock (see disclaimer at the end of this blog).
I personally traded Acerus shares in large quantities between .10 and .20 cents for much of 2016 and into 2017. There was a significant change in share ownership at that time and therefore the liquidity to trade large blocks. At a particular point in 2017, I stopped trading the stock when I decided that it was becoming a worthwhile “investment”, and decided to add to and hold my shares rather than trade them. At the same time I also bought shares for the partnership and segregated accounts which I manage at Takota.
I sought to fully understand the Company and the major players involved. Over the past couple of years I become acquainted with the Chairman of the Company (who owns 48% of the outstanding shares), the (now former) CEO, the new interim CEO, the Chief Financial Officer, the Chief Operating Officer, and the Chief Science Officer. I attended two annual meetings, and the Eugene Melnyk court hearing where he sought leave to bring a derivative action against the Company. I had conversations with at least one of the two hedge funds who were formally significant shareholders in the Company.
What I found was a company with competitive advantages that address several enormous and in some cases topical or “hot” market segments, a Company that had been completely abandoned by “the street”, by institutional investors, and by investors at large. The share price was completely “washed out” and yet the Company has some interesting assets and seemingly enormous prospects. From that perspective, it is a typical Takota holding.
I’m looking forward to the Company achieving both sales growth, and incremental worldwide approvals for Natesto (their testosterone replacement therapy) and various other business milestones in 2018 and beyond.
P.S. More recently, it has also come to light that the Company offers an interesting play on the medical marijuana business, a space which has captured the imagination of many investors. In December Acerus applied for patents relating to their nasal delivery mechanism in the administration of cannabinoids.
***Takota Asset Management owns shares of Acerus Pharmaecuticals on behalf of its Managed Accounts and Premium Value Partnership. In the future Takota may buy more shares, or sell some or all of its shares for its Managed Accounts and/or Partnership. Investors should seek the advice of their financial advisor before considering an investment in Acerus, or do their own in depth due diligence of the Company, its prospects, and the risks inherent in investing in a Company that has yet to achieve positive net cash flow. This is not a recommendation to buy or sell Acerus or any other security.