Here's What We Think Comes Next From Pernix Therapeutics Holdings Inc (NASDAQ:PTX)

Pernix Therapeutics Holdings Inc (NASDAQ:PTX) is starting to make a comeback. The company took a real hit during the four weeks subsequent to the middle of last month, bottoming out on August 14 in and around $2 a share. Over the last couple of weeks, however, the company has risen close to 200% to close out yesterday's session at a little over $3 a piece. We haven't really had much in the way recent news (apart from a conference call a few weeks ago that we published our thoughts on here) and the only filing comes by way of this 8K detailing the setting of the date for a 2017 shareholder meeting, which is now penciled in for November 15.So what's driving the action?Simply put, speculation surrounding what's at stake going forward and how the upcoming shareholder meeting might play into the value of an exposure to this company right now. The thing is, management put out financials last month and they weren’t that bad. Not great, but not bad. We also got the resolution of a refinancing strategy that, again, turned out not bad the company. As mentioned, however, we got some downside action and the only real explanation for this is that hedge funds are pushing the stock down in an attempt to close out short positions. Subsequent to the bottom on August 14, therefore, real market forces came into play and the stock revalued to reflect true potential. PTX 1 Year ChartHeading into the shareholder meeting, expectations are that we will get some sort of announcement that clarifies exactly how CEO John Sedor and his team intend to carry the company forward. We mention Sedor specifically here because his CV highlights him as a guy with experience in chaperoning biotechnology companies through a buyout process. We initially highlighted this one last year as a potential candidate for a buyout and there is every chance that any development that comes as part of the upcoming shareholder meeting will reinforce the suggestion.So what are we looking for specifically?One possible outcome is that Pernix spins each of its three lead portfolio assets, Treximet, Silenor and Zohydro, into separate holding companies and gives shareholders a portion of each spinoff. Why might this be a good idea? Because each is an attractive asset in its own right, but as a basket of assets, the three might not look as attractive to a potential buyer. To put this another way, Treximet could be attractive to one company and said company might be willing to pay a premium for the asset, however if it was forced to acquire the entire portfolio (through an outright buyout of Pernix) then Pernix may not be able to maximize value from the other two assets, which the company who is doing the buying doesn't really want. As three separate entities, it will be far easier to maximize value and therefore far more likely that shareholders will get a premium return on their holdings than in the alternative scenario.We would wager that much of the speculative acquisition that's going on right now is banking on a similar development to that which we have described resulting from the upcoming shareholder meeting. Of course, it's incredibly speculative, and we've nothing but experienced on which to base it. With that said, however, if things do play out that way, it's hard to see Pernix doing anything but running dramatically into the close of the year subsequent to the meeting we're talking about.The key thing here is to be aware of the risks. This one has been manipulated considerably (or so it would seem) over the last 12 months and there's nothing stopping this manipulation from shuffling things around once more. Longer term, however, we think a buyout is almost certain and, if Sedor is as smart as his CV suggests, the above-described scenario would be a good bet.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on PTX, sign up below!Image courtesy of Hamza Butt via FlickrDisclosure: We have no position in PTX and have not been compensated for this article.