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(iStockPhoto / Getty)
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Schizas’ Mailbag

Trimel investors aren’t feeling the joy Add to ...

Hi Lou,

What is your take on Trimel Pharmaceuticals? They are making a female orgasmic disorder drug called Tefina that is currently in phase II. If it is approved do you think this stock will be the golden egg?

Word of mouth is Eugene Melnyk -- who created Biovail -- owns a lot of the stock. They also have another drug in the works that treats men with low testosterone.

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Cam

Hey Cam,

Thanks for the assignment.

Trimel Pharmaceuticals Corp. holds the development and marketing rights to a bio-adhesive intranasal gel for the delivery of three products. The product that treats low testosterone in men is branded as CompleoTRT. The compound has completed its Phase III trials and is now in the process of obtaining the approvals needed to get the treatment into the market. Tefina is, as you correctly cited, in Phase II trials which means that it still has a way to go before becoming a revenue generating product.

You wanted to know if Tefina if approved would be the golden egg. That is a difficult question to answer. The condition that it treats is said to afflict one in five women so there is a potential market but I am not sure if Tefina is a company maker. What is known about the pharmaceutical industry is that you need a robust pipeline of new blockbuster compounds to drive profitability given the expense and risks associated with the clinical trial process.

The research I have conducted on your behalf indicates that Eugene Melnyk owns 58.9 per cent of the shares in TRL as cited in a filing posted on Feb. 27, 2013. If you think he is the stick that stirs this drink then you have the opportunity to put your money in play with his.

An investigation of the charts will provide added insight as how best to proceed with this stock.

The three-year chart is no oil painting. The run to $5.00 in 2012 is behind us and all this left is a series of lower highs and lower lows. In addition the shares have met resistance along the 50- and 200-day moving averages. Volume has been thin over the last thirty days of trading with only six days of above average action. The market capitalization for the company is only $120.57-million, which makes it a microcap. As we have learned over the years the smaller the cap the bigger the risk.

The six-month chart isn’t providing much support for a buy decision. The downtrend line is intact and is providing resistance to any advance. The MACD and RSI are currently trending lower, putting another mark against a buy. TRL probably needs to retest support at $1.25 before it is ready to reverse the selling that has taken the pleasure out of owning this stock.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

 

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