Pernix Therapeutics Holdings Inc (NASDAQ: PTX)
Pernix Therapeutics has had an incredible time in the market over the past 3 months. In fact, in this time, the stock has climbed by more than 60% from $0.50 per share. However, in my opinion, what we’re seeing is merely the tip of the iceberg. Today, we’ll talk about why I’m expecting to see further gains out of PTX ahead.
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PTX Now Has A CEO That Knows What He’s Doing
First and foremost, I think it’s imperative that we talk a bit about what we’ve seen in management at the company over the past few months. For some time, Doug Drysdale held the position as CEO at Pernix Therapeutics. Unfortunately, under his leadership, we didn’t see much positivity, which is one of the big reasons the stock didn’t see gains for some time. However, recently, John Sedor took on the role as the long-term CEO of the company.
This is a great move for PTX and its shareholders. At the end of the day, there are few professionals that know as much about the pharmaceuticals industry as Sedor. For me, one of the most interesting things about this change is what Sedor is known for. You see, it’s not uncommon for him to take over a company, then restructure it to be sold. So, this raises the question, “Is PTX gearing up to be acquired?” Nonetheless, even if an acquisition isn’t the goal, John Sedor has the ability to really turn things around, and he has already started to do so.
Sedor’s First Move To Improve The Company
Regardless of whether or not the new CEO is working to sell the company, he has made some big changes thus far. The biggest of these changes is company restructuring. You see, one of the first things that he noticed when he took control of the company is that the sales side of things needed some care. As a result, he made the decision to restructure the company in order to address the issue.
The big issue at Pernix Therapeutics with regard to sales was a big lack of efficiency. Unfortunately, sales representatives had territories that really didn’t make sense. Because of this, they found themselves spending a ton of time driving, and that could be time spent selling. As a result, territories have been restructured in order to better optimize time spent by sales staff.
The new CEO has also made some big cuts to the team. Under the new restructuring efforts, the main goal is to increase efficiency and reduce cost. One thing that was noticed was that there was quite a bit of redundancy in the current PTX sales model. By combining the neurology and pain management sales forces and trimming the fat surrounding the combination, the workforce was reduced by more than 20%. This added incredible savings and should increase sales volume. Of course, some of the layoffs were in senior management. In fact, CFO Sanjay Patel, COO Terence Novak, and SVP Barry J. Siegel have all left the company as part of this restructuring.
In a statement surrounding the restructuring efforts, John Sedor, CEO At PTX, had the following to offer:
“Since I took over the CEO duties at Pernix, we have been performing a thorough analysis of the specific market opportunities served by our products and how well they are addressed by our existing organizational structure. As part of this analysis it became clear that there were significant opportunities to optimize Pernix’s field force to more efficiently cover the most productive physicians. The actions announced today are designed to improve productivity, instill a more result-based culture and enable Pernix to more effectively serve our customers.
I would like to thank each and every one of the affected employees for their hard work and dedication to Pernix during their tenures here… While it is extremely difficult to execute work force reductions, this initiative is necessary to drive sales growth effectively, while building a more efficient organization. These actions represent an important step in our efforts to unlock the significant value that currently exists within Pernix.”
The Bottom Line
The bottom line here is that, yes, PTX has had a rough time in the past, and for good reason. Sales redundancies limited potential. However, under new management, that’s not the case. Moreover, there’s a strong case for an acquisition in the works ahead. Nonetheless, even if there is no acquisition down the road, the growth potential here is incredible. All in all, I’m expecting to see gains out of PTX moving forward.
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[Image Courtesy of Wikipedia]