WILMINGTON,aaiPharma (Nasdaq: AAII) has once again reiterated its outlook on the performance of the Darvon and Darvocet-N franchise and reaffirmed that the company expects an annualized run rate of $55-60 million for the products.

“We are very pleased with the continued success we are experiencing in the marketplace with our Darvon and Darvocet-N franchise,” said David Hurley, president of the Pharmaceuticals Division of aaiPharma, “and are gearing up for the launch of a new, broader promotional campaign for 2003.”

In October, aaiPharma first said it would raise revenue guidance based on increased sales of $30.5 million of Darvon and Darvocet-N six months after their acquisition. Previously, the company’s revenue guidance for the product line was $50 – $55 million.

Despite the reiteration of its previous guidance, at least one analyst who covers aaiPharma doesn’t make much of the announcement from the Wilmington-based pharmaceutical company, which also has operations in Chapel Hill.

“No reaction really,” says David Windley of Jeffries & Co. in Nashville, TN. “It is a reiteration that is several times old. They’ve reiterated that guidance at least once if not more.”

If anything, Windley says, the announcement is an effort by the management of aaiPharma to prove the faith they have in their company and try to persuade others.

“Well, it reinforces that the progress that they’re making on Darvon and Darvocet-N is positive,” he says. “It is a bone of contention with some people who are negative on the stock…that these product lines are not doing well. But in management’s view, they are doing well or better. It’s a personal difference of opinion”

One analyst’s influence

Much of the doubt arose on Aug. 22, when shares of AAII plunged 17 percent on news that Raymond James Analyst Michael Krensavage downgraded shares the stock from “strong buy” to “market perform.”

Krensavage’s research note indicated there was concern that sales of Darvon and Darvocet-N were slipping. The company had been betting that continued price increases would allow aaiPharma to hit its financial targets, but generic drugs seemed to be grabbing a larger piece of the market.

“They’re trying to tell the Street that they continue to see these product lines perform as expected — reiterating news that was put out a couple times already,” says Windley, who upgraded the stock to “buy” on June 3. “The real issue revolves around a kind of a difference of opinion with management and — the analyst at Raymond James. He has taken pretty negative bent toward the company.”

Krensavage declined to comment until he spoke with aaiPharma representatives.

“I haven’t commented yet to the sales force,” he said, “and am unable to say anything until I speak with them first.”

Shares of AAII have steadily declined since the stock reached a 52-week high of nearly $40 in April. After Krensavage’s downgrade in August, the price of AAII continued to decline, reaching a 52-week low of $9.50 in October.

Since then, the stock has shot back up into the $15 range. It closed Friday at $14.01, up 40 cents over previous day’s close of $13.61.

Ramping up for 2003

In addition to reiterating its guidance, aaiPharma indicated that its sales representatives and promotional activities are having the expected and desired impact in the marketplace.

“As we further increase our promotional activities throughout the year and continue to ramp up our sales force to 150 representatives by the end of 2003,” said Hurley, “we expect these positive trends to continue.”

And as previously announced, aaiPharma says it also plans to launch two line extensions to the Darvon and Darvocet-N brand franchise per year for the next three years, starting in 2003.

“The current portfolio provides us with an excellent platform for launching new products into the pain market,” added Hurley, “and is establishing aaiPharma as an important participant in the pain marketplace.”

aaiPharma: www.aaipharma.com