Axcan Pharma has big potential
Thought I'd start posting some Axcan articles and financial results because it seems that the company is seriously overlooked. The following appeared this summer in Investor's Digest:
Axcan Pharma has big potential
From a recent report by analyst Jean-Luc Berger.
We rate the shares of Axcan Pharma Inc. (AXP-TSE, $6.20, 800-565-3255) as a buy. Our 12-month target price is $12.
Axcan Pharma is an emerging Canadian pharmaceutical company that
manufactures, distributes and markets prescription and non-prescription pharmaceutical products.
Its primary focus is the development and marketing of gastrointestinal drugs in Canada, the U.S. through Axcan Schwarz LLC, and more recently in Europe through a joint venture with Bonne Sante and Czet Pharma from Poland.
Axcan's research and development program is building toward the prevention of colorectal cancer, hypercholesterolemia, non-alcoholic steatohepatitis and the eradication of the Helicobacter pylori bacterium.
The company also manufactures and distributes concentrate solutions for hemodialysis, as well as distributing dialysis equipment through Althin Biopharm Inc.
Axcan markets Salofalk in Canada for the treatment of ulcerative colitis and the prevention of the recurrence of Crohn's disease in patients that have undergone colic/ileal resection.
The company's market share for inflammatory bowel diseases was about 23 per cent, with sales of $9.06 million for fiscal 1998.
During 1997, the market grew by more than four per cent in terms of
prescriptions and only Axcan, P&G and Hoechst gained market share in 1998, compared with 1997.
Axcan also markets Viokase in the U.S. and Canada. Viokase is an oral
pancrelipase (enzyme pork extract) formulation indicated as a digestive aid in the treatment of such ailments as cystic fibrosis and chronic pancreatitis.
The North American market for pancrelipase is estimated at between US$120 and $150 million. Viokase was the best performing product of Axcan on the U.S. market in fiscal 1998, with $12.5 million dollars in sales or about 29 per cent of its total revenues for the period.
In Canada, Axcan markets URSO for the management of Primary Biliary
Cirrhosis (PBC) and other cholestatic liver diseases. URSO contains ursodiol which stimulates bile flow and makes the bile less cytotoxic.
URSO represented $8.9 million in sales for fiscal 1998, or about 20 per cent of the total revenues of Axcan for the period. According to Axcan's management, rates of new prescriptions for URSO are growing at an average of 20 per cent a week. It is estimated that about 50,000 patients could have PBC, translating into a potential market of US$100 million.
Axcan Pharma has a clear and focused business plan with well-established objectives. Because of limited organic growth in Canada, the company is pursuing an aggressive policy of acquiring products, technologies and businesses.
The next challenge is to integrate them into Axcan Pharma to extend its geographic and product range while maintaining its principal therapeutic focus on gastroenterology.
Major sales jump
At the end of fiscal 1998, Axcan Pharma was distributing more than 15
products in North America. Sales for fiscal 1998 were $43.6 million, a
133-per-cent improvement compared with $18.7 million in fiscal 1997.
The performance of the hemodialysis activities of Axcan did not receive as much attention as they should have, compared with the company's drug business.
A major deterrent to Axcan that currently challenges the patience of many investors is waiting to see if URSO will achieve the company's sales expectations.
It is legitimate to believe, due to its orphan drug status and its joint venture with Schwarz Pharma, that URSO is expected to be a significant source of revenue for Axcan in the future.
We view the company as combining attractive franchise value with a strong balance sheet and stable earnings outlook. |
