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

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

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.


I Am Fluent In Three Languages ...item 1.. For...
I Am Fluent In Three Languages …item 1.. For-Profit Colleges Pay Executives Based On Profit (07/27/2012 ) …item 2.. RACE TO THE BOTTOM (Thursday, July 5, 2012) …item 3.. Senator Harkin’s Report: (JULY 29, 2012) … (Photo credit: marsmet523)

MYL : NASDAQ : US$28.57
Target: US$33.00

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. It is headquartered in Canonsburg, Pennsylvania.

MYL’s 4Q results and 2013 guidance brought upside and raised guidance as expected. However, focus will be on the $1.6 billion announced Agila

Agila brings an attractive injectables platform and moderate accretion though, like many, we were surprised at the limited financial disclosure which will leave lingering questions and a wider range on pro forma Street EPS. Overall, we’re raising standalone EPS and increasing our target to $33.
 4Q and 2013 outlook largely as expected. 4Q brought a penny of costdriven upside while 2013 guidance largely straddled consensus with
revenue lowered and EPS raised (EMEA a positive surprise).
 Agila is 5-7% accretive in 2014-16 on our analysis. 2014 pro forma EPS will be the primary focus and our $3.32 is driven by 3% core upside and 5% deal accretion.
 Where do we go from here? Raised guidance and major deal announcement were the two primary catalysts we were looking for. Focus will now shift to 2014 with catalysts and EPS upside the primary drivers for both MYL and ACT. Assuming a modest upward stock move in MYL, valuation would be ~ in line with ACT (on our 2014 pro forma EPS) – we see upside in both but all else equal more near-term stock moving catalysts in ACT.
 We are raising our target to $33. Our raise reflects both higher 2014 standalone EPS (+3%) and accretion (+5%) though we for now leave
Agila out of published EPS. Our PT is based equally on 2014E P/E and EV/EBITDA and implies a 10x multiple on pro forma 2014E EPS.

Updates on Life Sciences Teva / Watson / Map Pharma and AGN

Clonazepam 1mg Teva Pharma
Clonazepam 1mg Teva Pharma (Photo credit: Wikipedia)

October 24

Our sentiment thoughts on names where interest is greatest:


Expected mixed Q3 and below-Street 2013 guidance introduction (we think buy side is at ~ $5.40 vs $5.71) against (1) low expectations, (2) 2012 underperformance, (3) low valuation, (4) high short interest (and perceived “safety short”) and (5) upcoming analyst day where a strategy update and potential dividend boost could help the stock.

 Challenges remain but we see a broader revisit here setting up an interesting risk/ reward scenario into the Dec. 11 strategy meeting and perhaps more so in early 2013. 


 Recent interest was muted. Likely related to (1) WPI “fatigue” as it is a well-owned favorite name (for good reason) and (2) the recent run which has led to apprehension and that spilled into our PRGO (HOLD) conversations. We still think numbers matter more and are going higher which should keep the positive momentum in the stock. 

MAP Pharma ( MAPP BUY) 

Interest is growing and  1) potential  mid-April LEVADEX approval and (2) take-out speculation which is likely to pick up. 

MAPP management and AMP  continue to have high confidence in LEVADEX post the re-file and likely to get more attention in the next few months as an AGN “pipeline opportunity” given its partnership. MAPP and IPXL remain our top small cap ideas. 


There is higher interest in AGN  with a focus on the path but we still haven’t heard anything that makes us think we’ll see a leg up until at least early 2013 when focus on data gets closer (DARPin and Latisse for scalp) – still a solid longer-term story. For MYL, we think Q3 will be solid (as do others) but there is healthy skepticism around the growth outlook in 2013+, which we share. Until visibility improves we think it’ll be hard to see a break-out.



Life Sciences — Specialty Pharma Review

עברית: פועלת במפעל "אסיא"
עברית: פועלת במפעל “אסיא” (Photo credit: Wikipedia)

Sept 19


Macro influences (QE3, elections, Europe, F/X, fiscal cliff, etc.) remain a central market theme with broader implications, including for our specialty pharmaceutical sector. With that in mind, we’ve taken a closer look at our coverage relative to positioning into yearend.

We prefer low-multiple names that have identifiable near-term catalysts – a combination that we think will work on a continued market rally with event-driven upside providing a hedge for any potential market re-trace. As such, our top single stock ideas into year-end are WPI, IPXL and MAPP – all BUY rated.

Given the various macro scenarios that can play out, we’ve taken a closer look at our coverage, identifying the top names levered to themes we’re getting questions on. Changes in capital allocation – the greatest potential -announcement sits with HITK and TEVA ahead of year-end. We peg the likelihood of a new HITK buy-back at over 50%.

For TEVA, we expect the company to at least reaffirm its cap allocation commitments (dividend and buy-back) at its Dec. 11 strategy update, with potential to get more aggressive on the buy-back at current levels.

TEVA is somewhat of a “special situation” given its pending strategy update. We could include WCRX (-13% YTD) despite the total return upside via special dividend.




PRGO has the least exposure to macro while AGN brings robust growth and a solid pipeline despite some consumer and EU exposure. (We launched on AGN this morning with a HOLD rating.)

Moves we’ve see in heavily short names.

Within our coverage, we’ve seen short interest increases in PRGO and IPXL while AGN and MYL have seen the biggest drops.


MAPP and HITK – have strategic asset bases, compelling  valuations on SOTP or EV/EBITDA, and cash balances > 20% of equity cap. MAPP is

more interesting to us, but we would put these on our top two list for potential M&A.