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Avanir Pharma: Nuedexta Sales Launch Slow

ALISO VIEJO, Calif. ( TheStreet) -- Avanir Pharmaceuticals (AVNR) is finding the launch of its new drug Nuedexta to be slow going.

Nuedexta gross sales totaled $505,000 for the fiscal second quarter ended March 31, Avanir reported Monday night. Avanir executives expressed optimism about Nuedexta's launch considering marketing didn't kick off until February and over 1,000 new prescriptions for the drug have been written through the end of March.

Investors and analysts were expecting better results and are now expressing concerns that Nuedexta prescriptions aren't growing as fast as they could.

Avanir shares were down 26 cents, or 6%, to $3.86 Tuesday as analysts cut near-term Nuedexta sales forecasts and reduced price targets while maintaining hopeful optimism that the drug could still hit long-term peak sales forecasts.

Nuedexta was approved last year as the first-ever treatment for pseudobulbar affect (PBA), a relatively obscure neurological condition that causes patients to experience uncontrollable bouts of laughter and crying. PBA can be associated with patients suffering from multiple sclerosis or amyotrophic lateral sclerosis.

"Nuedexta's launch has been more challenging than we forecast, but we still strongly believe in the drug's ultimate commercial potential and still anticipate peak annual US sales of $350 million and EU sales of $300 million, wrote Cannaccord Genuity analyst Ritu Baral in a Tuesday morning note to clients.

Baral, however, cut her Avanir price target to $6 from $10 after sharply lowering projected Nuedexta sales for 2011 and 2012 by 88% and 81%, respectively. Baral maintained her peak sales estimate for Nuedexta but pushed out the timing of that estimate by two years.

Wedbush analyst Greg Wade said Nuedexta sales in the quarter beat his estimate, but that's only because he whacked his forecast last Friday.

Wade had been forecasting Nuedexta end-user sales of $1.6 million for the fiscal second quarter but reduced that estimate to $400,000 on Friday due to weaker-than-expected prescriptions. Wade also cut his fiscal year Nuedexta sales estimate but maintained his $13 price target on Avanir.

"We believe that physicians are experimenting with Nuedexta therapy on a limited basis and anticipate positive results to lead to broader prescribing. Given that PBA is a condition for which no approved therapies existed prior to Nuedexta and that physicians generally may not screen for PBA, we would expect this launch to take some time to accelerate; current script growth is not surprising, in our opinion," wrote Wade in a Tuesday note to clients.
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