All posts in category Life Sciences

Anacor Pharmaceuticals

Atopic dermatitis

Atopic dermatitis (Photo credit: Wikipedia)

ANAC : NASDAQ : US$7.29
BUY 
Target: US$13.00

COMPANY DESCRIPTION:
Anacor is a biopharmaceutical company focused on novel small molecule therapeutics derived from its boron chemistry platform. Its lead product candidate is tavaborole, a topical antifungal currently in Ph3 clinical
development for treatment of onychomycosis (fungal nail infection). In addition, Anacor is developing AN2728, a topical anti-inflammatory for treatment of atopic dermatitis. ANAC also has R&D partnerships with GSK,
LLY, and MRX.

Investment recommendation


Reiterate BUY, increasing target to $13 from $8 on more upside to AN2728 potential in AD after proprietary MD opinions on Phase 2b. We
see ANAC’s AN2728 for atopic dermatitis as a major value driver for
shares going forward. Tavaborole, ANAC’s Phase 3 topical antifungal for
toenail fungus (onychomycosis), may be approvable, but efficacy rates
lower than a competitor will likely limit market potential. We are raising
our target to $13 from $8 in part on increased peak market share and
peak sales as well as increased chance of success.
Investment highlights
 After speaking to dermatologists on their opinions of the March
AN2728, we believe there is major upside to our previous estimates.
We have increased peak market share to 25% from 20%, as well as increasing AN2728’s chance of success from 40% to 50%.
 Dermatologists we have spoken with think there is a strong suggestion that AN2728 could be stronger than Elidel and Protopic.
While noting there is no head-to-head data, they believe the Phase 2b very strongly suggests that AN2728 results in more symptom relief than either Elidel or Protopic.
 Safety and reimbursement will remain as two major levers of AN2728’s opportunity. Pricing will also be key, and MD’s do not think the drug’s better profile will justify a higher price.

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by jackbassteam on April 25, 2013  •  Permalink
Posted in Drug Stocks, Life Sciences

Posted by jackbassteam on April 25, 2013

http://amp2012.com/2013/04/25/anacor-pharmaceuticals/

Sarepta Therapeutics Target $ 47

English: Logo of the .

English: Logo of the . (Photo credit: Wikipedia)

SRPT : NASDAQ : US$35.85
BUY 
Target: US$47.00

COMPANY DESCRIPTION:
Sarepta Therapeutics is a biopharmaceuticals company that is focused on the discovery and development of unique, first-in-class therapeutics for the treatment of lifethreatening rare and infectious diseases. Lead product candidate eteplirsen, a phosphodiamidate (PMO) morpholino antisense oligomer for the treatment of Duchenne muscular dystrophy (DMD), is currently in Ph2 trials.

Investment recommendation


Initiating with a BUY, $47 target on eteplirsen’s potential for rapid, broad uptake driven by clean safety and good efficacy in Duchenne muscular
dystrophy (DMD), a huge unmet need. SRPT’s lead candidate, eteplirsen (ETE), induces skipping of exon 51 to restore production of functional
dystrophin, whose absence is responsible for DMD pathology. We think ETE has a chance of accelerated approval, making it to market faster than
competitor, Prosensa. Even if it doesn’t, we think ETE’s safety profile would allow it to rapidly assume majority market share if Prosensa’s compound is well established at the time of launch. We conservatively model no accelerated approval, and our $47 target is based on pNPV analysis.
Investment highlights
Eteplirsen: Skipping of exon 51 with a morpholino clearly restores dystrophin production with excellent, likely best-in-class safety with strong evidence of impressive efficacy. While the safety database is limited, we think eteplirsen binding, chemistry and metabolism support continued clean safety. Eteplirsen has shown clear, placebo-controlled ability to restore dystrophin production (the defect behind DMD).
 The accelerated approval decision: major near-term stock driver even if we think competitive data, eteplirsen safety are the REAL value drivers.
We think, rationally, ETE deserves accelerated approval, but the decision rests with FDA, a bureaucratic agency. Patient pressure to accelerate rare disease drug development may be offset by negative congressional scrutiny on drug safety. We think a stock bet on ETE accelerated approval
is a bet on the progressiveness/edginess of FDA (which we are not willing to make) rather than ETE potential. Even without accelerated approval,
we think ETE will ultimately become the market leader in DMD, driven by safety. Revenues would be delayed in this case, but only by ~1 year, and
our peak market share assumptions are the same in either case.
 We expect expedited development for follower drugs for exons 45, 53 and 50, expanding the PMO treatable population by ~20%.

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by jackbassteam on April 10, 2013  •  Permalink
Posted in Drug Stocks, Life Sciences
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Posted by jackbassteam on April 10, 2013

http://amp2012.com/2013/04/10/sarepta-therapeutics-target-47/

STAAR Surgical Company Target $6.50

STAA : NASDAQ : US$5.51
HOLD 
Target: US$6.50

COMPANY DESCRIPTION:
Founded in 1982, STAAR Surgical is a fully integrated medical device company competing in the global ophthalmology sector, and plays in two primary segments: phakic intraocular lenses (PIOL) used to treat refractive errors such as myopia and astigmatism, and intraocular lenses (IOL) used to treat cataracts.

Investment recommendation


STAAR Surgical announced preliminary Q1 sales that exceeded our/Street estimates led by strong ICL revenue, which grew 24% Y/Y
and exceeded the $10M level for the first time in company history. Q1 results are a terrific start to the year and mark a reversal of three
consecutive quarters of missing Street estimates. For us to get more constructive on the name, we want to see consistent improvement in the
company’s important Asian ICL markets – namely Korea, Japan and China – to accompany this quarter’s solid results in the US & Europe, which drove the ICL upside in Q1.

While we maintain our HOLD rating and $6.50 price target, we continue to carry a bullish bias to the ICL opportunity globally over the medium to long term.
Investment highlights
 STAA preannounced Q1 revenue of $18M (+16%) vs. our $16.4M estimate and the consensus projection of $16.5M.
 Q1 global ICL sales grew ~24% Y/Y, well above our 8.1% estimate, driven by ICL growth of 57% in Europe and 12% in the U.S.
 IOL sales in Q1 were flat due to the negative impact of the foreign exchange rate in Japan, which saw an impressive 25% growth rate in IOL unit sales. We were projecting Y/Y IOL sales growth of 2%. Notably, STAA said it exited Q1 with $900,000 in backorders for the KS-SP Pre-Loaded Acrylic IOLs in Europe, owing to its partner’s inability to produce enough lenses to meet demand.
 We will update our model when STAA reports full results on May 1.

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by jackbassteam on April 10, 2013  •  Permalink
Posted in Health Care, Life Sciences
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Posted by jackbassteam on April 10, 2013

http://amp2012.com/2013/04/10/staar-surgical-company-target-6-50/

Impax Laboratories : POTENTIAL FOR EVENT-DRIVEN UPSIDE

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IPXL : NASDAQ : US$15.29
HOLD 
Target: US$20.00

COMPANY DESCRIPTION:

Impax Laboratories (IPXL) is a global pharmaceutical and drug company that develops, produces and markets generic and branded pharmaceutical products. It has two operating segments, Global Pharmaceuticals and Impax Pharmaceuticals, which develops brand products to treat Alzheimer’s, ADD, and MS, among other diseases.

We leave our rating unchanged absent better visibility into an event but have taken a closer look at various upside triggers.
 A strategic or financial buyer emerges. The asset is attractive, and our analysis considers several potential suitors both strategic and financial. While it’s not clear that IPXL is a willing seller (potentially a big hurdle but not insurmountable), there is precedent for prior M&A involving companies with manufacturing challenges (we’ve taken a close look at Andrx which serves as an interesting example).
 An activist shareholder(s) gets involved. The current shareholder list (per last update) doesn’t call out any obvious activist funds but a lot of
volume has changed hands. Questions remain around desired changes beyond what management is doing (i.e., value creation beyond a sale), but a history of activism in the space exists (i.e., MYL).
 IPXL pulls the trigger on M&A. This could be good or bad depending on the asset. IPXL continues to search for assets, with its ~$6 per share in cash and no debt (~40% of equity cap). There are several acquisition needs, but we think focus on another CNS brand asset to leverage the footprint ahead of the Rytary launch is high.
 Sum-of-the-parts (SOTP) should set a floor. Our updated SOTP analysis implies NPV support of ~ $19 from cash (~$6), Adderall XR (~$1), base business (~$4.50), Zomig (~$1.50) and Rytary (~$6) – we think Rytary is being discounted heavily given lack of visibility at this point. Pipeline and infrastructure remain as  an upside option.

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by jackbassteam on April 4, 2013  •  Permalink
Posted in Drug Stocks, Life Sciences
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Posted by jackbassteam on April 4, 2013

http://amp2012.com/2013/04/04/impax-laboratories-potential-for-event-driven-upside/

Actavis PULMICORT WIN POSITIVE FOR ACT

ACT : NYSE : US$92.46
BUY 
Target: US$102.00

COMPANY DESCRIPTION:
Actavis (formerly Watson Pharmaceuticals) is an integrated global pharmaceutical and drug company that develops, produces and markets generic, brand and biological pharmaceutical products, specifically focused on urology and women’s health.

ACT announced a win in the much-awaited Gx Pulmicort litigation allowing a generic launch against AstraZeneca’s Pulmicort (~$1 billion sales). The court ruled on non-infringement of the ‘834 patent and invalidity on the ‘603, which implies that Apotex will also likely launch (and possibly an authorized generic), joining TEVA which is currently the only generic on the market. The debate here was that TEVA assumed status quo in 2013 guidance (no competition), while ACT assumed a positive decision and launch (i.e., new competition).

While the decision was largely considered a toss-up, our forecasts for both companies reflected an ACT launch. As such, we’re leaving estimates for both unchanged though expect Street EPS to gravitate to the high and low end of guidance for ACT and TEVA, respectively. Bottom line: more good news for ACT, and for TEVA this is a negative and the realization of a well understood risk. Reiterate BUY on ACT, remain HOLD on TEVA.
Positive for ACT – raising target to $102: The Pulmciort news follows a string of positive product announcements and adds ~$0.13 of EPS (or +2%) to ‘13E (for 3 quarters) with full year follow-through to 2014. We assume a 4-player market with 75% price discount and 25% share. While this was technically in guidance, the recent launch of Gx Suboxone was not, leaving significant upside potential to EPS and perhaps more importantly this removes for many what had been an unwanted binary risk.

Our $102 ACT target is based on 11.0x P/E and 10.0x EV/EBITDA applied to our 2014 forecasts (where we’re 4% above consensus).
Negative for TEVA – no change to $45 target: This is TEVA’s largest generic product at close to $500 million in sales (~ $0.18 in EPS). We estimate a ~$0.10 hit this year (-2% to EPS) for 3 quarters and greater in 2014 softened by what is likely elimination of the royalty back to AZN. We think the guidance range can hold though EPS is now likely toward the lower end. Our $45 TEVA target is unchanged and still based on 9.0x P/E and 7.5x EV/EBITDA applied to 2014. See our 3/17 note “Closer look at stock strength ahead of upcoming news flow” for detail.

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by jackbassteam on April 3, 2013  •  Permalink
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Posted by jackbassteam on April 3, 2013

http://amp2012.com/2013/04/03/actavis-pulmicort-win-positive-for-act/

Mylan LOWERING TARGET TO $32

English: Logo of the .

English: Logo of the . (Photo credit: Wikipedia)

MYL : NASDAQ : US$28.70
HOLD 
Target: US$32.00

COMPANY DESCRIPTION:
Mylan, Inc. (MYL) engages in the global development,marketing and producing of generic and brand pharmaceutical products. It operates two segments, Generics and Specialty, with branded drugs such as EpiPen Auto-Injector, Performist Inhalation Solution, and antiretroviral (ARV) drugs.

Our early March downgrade to HOLD was in part related to growing concern around the EPIPEN franchise. While broader concerns over an AB-rated generic EPIPEN in September 2015 remain a meaningful risk, current TRx trends are tracking below our forecast and as such we’ve revisited our forecast. We’re lowering EPIPEN sales for 2013E through 2016E with the result a 2-4% reduction in EPS now pegging us below consensus.

We’re lowering our price target consistent with the EPS cut from $33 to $32 – no change to HOLD rating.

 EPIPEN TRx growth trending negative. We now model flattish TRx growth through 2015 (from ~low to mid single digits) with 15% annual price increases (unchanged). Recently launched brand competitor Auvi-Q continues to pick-up incremental share with no signs thus far of overall market growth. Push-back will point to tough comps over last year due to seasonality, which at least in part likely explains the magnitude of the negative trend, but for now we believe trends suggest a more conservative outlook.


 With contribution expected to accelerate to close to 30% of EPS this year (~22% in 2012), debate around potential competition is likely to pick up. As EPIPEN becomes a bigger part of the P&L, focus will shift to (1) how much EPS is at risk and (2) how MYL plans to backfill it. Per prior settlement TEVA can enter in September 2015 with FDA holding the key to whether or not an AB-rated product will be approved. We think uncertainty here could weigh on the stock.


Valuation reasonable, but we still prefer ACT for more near-term catalysts. Our $32 target is based on ~10x P/E and 8.5x EV/EBITDA
multiple on our 2014 pro forma forecasts. MYL currently trades at 9.4x 2014E EPS, which is a slight discount to ACT and should keep support in the stock assuming forecasts hold.

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by jackbassteam on April 3, 2013  •  Permalink
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Posted by jackbassteam on April 3, 2013

http://amp2012.com/2013/04/03/mylan-lowering-target-to-32/

Insmed

Cystic fibrosis manifestations

Cystic fibrosis manifestations (Photo credit: Wikipedia)

INSM : NASDAQ : US$6.83
BUY 
Target: US$12.00

COMPANY DESCRIPTION:
Insmed is focused on developing novel, targeted inhaled therapies for the treatment of serious orphan lung diseases. Its lead product candidate is Arikace, a liposomal formulation of FDA approved antibiotic, amikacin.

Investment recommendation


Initiating coverage with BUY rating, $12 target on Arikace potential in two orphan indications: cystic fibrosis (CF) P. aeruginosa and nontuberculous mycobacteria (NTM) lung infections. INSM’s lead candidate Arikace is a liposomal formulation of potent, FDA approved antibiotic amikacin. We expect positive data from an EU Ph3 trial of Arikace vs. current SOC TOBI (inhaled tobramycin) in CF patients (mid-2013) and a US Ph2 trial evaluating Arikace in NTM lung infections (data expected Q4/13). NTM is a larger market than CF with no approved therapies and may provide a quick path to market and premium pricing for Arikace. Our $12 target is based on pNPV analysis.
Investment highlights
 Potential to address unmet need: orphan status, accelerated approval for NTM could give Arikace fast path to US market. We estimate ~50k patients suffer from NTM infections in the US, making it a larger indication than CF. NTM causes significant morbidity and mortality, and there are no approved drugs to treat it. Arikace’s Ph2 NTM trial is currently enrolling (data expected Q4/13), as is a 25-patient compassionate use program. With GAIN Act QIDP status and good Phase 2 data in an orphan unmet need, INSM believes good data from the Ph2+extension could be enough to file an NDA in 2014.
 ~80% of adult CF patients have chronic P. aeruginosa infection; current Tx options are cumbersome and don’t prevent declines in lung function; if Arikace can stabilize FEV as Ph2 suggests, it’s a home run. TOBI (inhaled tobramycin, Novartis) is the current SOC for CF PA infections. Chemical properties of tobramycin prevent it from fully penetrating mucus present in CF lungs where bacteria reside, limiting its efficacy; its use is still associated with declines in lung function from infection-associated lung damage.
 Arikace’s formulation allows it to penetrate into human macrophages (where NTM infections live) and into thick, CF mucus/biofilm to target bacteria. Arikace is a liposomal formulation of the approved and commonly used aminoglycoside antibiotic amikacin. A lipid bilayer (liposome) shell facilitates delivery to areas (inside cells, mucous/biofilm) where standard antibiotics don’t penetrate. Arikace has the potential to be the first effectiive Tx for NTM and an improvement over current inhaled antibiotics for CF.

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by jackbassteam on March 25, 2013  •  Permalink
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Posted by jackbassteam on March 25, 2013

http://amp2012.com/2013/03/25/insmed/

Valeant Pharmaceuticals International Inc.

Valeant Pharmaceuticals

Valeant Pharmaceuticals (Photo credit: Wikipedia)

VRX : NYSE : US$73.33
VRX : TSX
BUY 
Target: US$83.00

COMPANY DESCRIPTION:
Valeant is a specialty pharmaceutical focused on dermatology, branded generics, and neurology indications in the US, Canada, Latin America, Europe and South East Asia. The company continues to grow through strategic acquisitions highlighted by the $2.6 billion acquisition of Medicis. In 2010, Valeant Pharmaceuticals International and Biovail Corporation completed a merger to form a single Canadian-based specialty
pharmaceutical company.

Investment recommendation


Valeant has agreed to acquire Obagi Medical Products (OMPI:Nasdaq) for $19.75 per share or ~$365 million. We believe that Obagi’s aesthetics
and skin therapeutic products are a good fit with Valeant’s large dermatology franchise. Given Valeant’s efficient tax structure, its strong
position in dermatology, and its core strength in integrating acquisitions (and driving synergies), we believe that this deal has a high probability
of completion. The Board of Obagi has approved the transaction.
Investment highlights
 Valeant again flexes its integration muscle. Valeant expects that this acquisition will be immediately accretive to cash EPS and sees a cost
synergy run rate of $40 million within six months of closing.
 More value in Medicis than originally believed. Now that Medicis is largely integrated, management recently indicated that it sees additional upside potential from this acquisition. Valeant expects to update its financial guidance on its Q1/13 call.
 M&A remains active. Obagi is a medium-sized acquisition for Valeant, in line with our expectations for smaller deals in the nearterm.
Nonetheless, management has discussed the idea of a ‘merger of equals’ that could potentially alleviate balance sheet constraints. We expect that speculation on this front could continue to buoy the stock.
Valuation
We value Valeant based on a DCF model using a WACC of 8.2% and a terminal growth rate of 1.0%. We have updated our model to include this acquisition and, as a result, we are increasing our 12-month target price to US$83.00 (from US$79.00), which supports our BUY recommendation.

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by jackbassteam on March 22, 2013  •  Permalink
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Posted by jackbassteam on March 22, 2013

http://amp2012.com/2013/03/22/valeant-pharmaceuticals-international-inc-2/

Pernix Therapeutics Q4

English: A bottle of LSD from a Swiss clinical...

English: A bottle of LSD from a Swiss clinical trial for end-of-life anxiety in cancer patients, circa 2007, conducted by Dr. Peter Gasser, sponsored by the Multidisciplinary Association for Psychedelic Studies. The opaque bottle has a red cap and a yellow, cyan, and white label. The label says in part: Clinical Study, EK # 2007/016, d-LSD hydrate Capsule, Only for research purposes. (Photo credit: Wikipedia)

PTX : NYSE MKT : US$5.49
BUY 
Target: US$12.00

COMPANY DESCRIPTION:
Pernix Therapeutics Holdings is a specialty pharmaceutical company that develops and manufactures generic and branded prescription and OTC
products, with particular emphasis on pediatrics. PTX is focused in the areas of allergy, upper respiratory, antibiotics and dermatology. PTX is headquartered in The Woodlands, TX.

PTX reported Q4 EPS and revenue that came in slightly below consensus. The lower 2013 outlook will temper forecasts and was driven by both top line and spend assumptions and caught us and most by surprise, driving the volatility today.

While we like the platform the company is building across brand, generics and OTC products, the transition away from the legacy, less profitable cough and cold business is taking time. We still see solid growth ahead for PTX driven by the relaunch of Silenor, the launch of Dr. Cocoa OTC, and a much broader pipeline acquired from Cypress/Hawthorn.

Execution on the business development front is still a big focus, with potential to add to the P&L as PTX looks to layer on additional assets with its sales force. We remain BUY-rated as we continue to see long-term value in the platform, but lower our price target to $12.
Model update – lowering estimates on revenue guidance, spend assumptions There are two main drivers of our reduced estimates: (1) lowered
revenue guidance (new range is $125-135M versus prior $135-145M pre-Somaxon deal) and (2) significantly higher SG&A and R&D spend (Phase III clinical study for pediatric product, OTC-related spend). A slower transition away from legacy cough and cold products and several product opportunities that haven’t met internal expectations (Natroba, Omeclamox-Pak) have exacerbated the transition.

Our EPS estimates from 2013-2016E are now (-$0.20), $0.01, $0.25 and $0.50.
Valuation – target to $12, which implies over 100% upside We are lowering our target to $12 (prior $14) which is based on an equal-weighted ~29.0x P/E and ~11.0x EV/EBITDA multiple applied to our 2016 forecasts discounted back

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by jackbassteam on March 19, 2013  •  Permalink
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Posted by jackbassteam on March 19, 2013

http://amp2012.com/2013/03/19/pernix-therapeutics-q4/

Oncolytics Biotech Inc. Q4 AND FULL YEAR 2012 RESULTS

Image representing Oncolytics Biotech as depic...

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ONC : TSX : C$3.12
ONCY : NASDAQ
BUY 
Target: C$8.00

COMPANY DESCRIPTION:
Oncolytics Biotech is a biotechnology company with a biologic therapy in late stage development for the treatment of various cancers. The company’s lead  product, Reolysin, is a live virus that has the ability to replicate in certain cancers, thus destroying the cancer cell. Oncolytics has received a Special Protocol Assessment from the FDA for Reolysin and has initiated a Phase III development program for the drug.
All amounts in C$ unless otherwise noted.

Investment recommendation


Oncolytics has reported Q4 financial results. Net loss for the quarter was $8.5 million or ($0.11) per share, in line with our estimate of $8.7
million (also ($0.11) per share). For Q4, R&D expenditures were $6.7 million, compared to our estimate of $6.9 million. Based on recent evidence of efficacy for Reolysin, we would be buyers of the stock in anticipation of more impactful data from the head and neck trial and the Phase II study in pancreatic cancer, both expected within 6-9 months.
Investment highlights
 Cashed up. Oncolytics recently completed a $32 million financing, resulting in pro forma cash of ~$50 million at quarter-end. We believe this represents almost 18 months of cash at projected burn.
 Hungry for more randomized data. Because data from the ongoing head and neck study is event-driven, exact timing of final data is uncertain. Moreover, the company may elect to forego an interim data analysis as that would result in a statistical hit for the study.
Next steps in a long journey. We expect that ONC will use recent positive Phase III data and the validation of its thesis to design a pivotal study focusing on the treatment of metastatic lesions.
Valuation
We value Oncolytics using a probability-weighted NPV model of lead drug Reolysin in key indications including head and neck cancer. We have adjusted our valuation to reflect the recent financing. Based on this analysis, we arrive at a revised target price of C$8.00 (lowered from C$9.00), which continues to support our BUY rating.

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by jackbassteam on March 18, 2013  •  Permalink
Posted in Life Sciences, Medical devices
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Posted by jackbassteam on March 18, 2013

http://amp2012.com/2013/03/18/oncolytics-biotech-inc-q4-and-full-year-2012-results/

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