I missed part of the report...
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4. Others Highlights :
A. Aczone- presented by Steve Garrett, SVP of Clinical Research
· Topical dapsone product using a proprietary formulation
· No clinical results released as yet
· Paul Hastings believes this product could reach sales of $100 to $200 million
· No head-to-head trials planned
B. Lemuteporfin- presented by Maurice Wolin, VP of Scientific Affairs & Clinical Research
· Released early clinical data showing Lemuteporfin is beneficial in benign prostatic hypertrophy (BPH) patients.
· QLT has prioritized the development of lemuteporfin for use in BPH in an upcoming phase IIB study ahead of the its potential use in
androgenetic alopecia (male balding).
Comments: We believe that both Aczone and Lemuteporfin currently have limited market potential due to insufficient information to
demonstrate that these products have significant competitive advantage(s) over existing treatments.
Valuation: We estimate 2006 EPS of $0.97 (ex. non-recurring items). Applying a 23 times multiple and discounting back 1 year by 11%, we
derive a target of $20.18. We selected a 23 times multiple based on an average of QLT comparable companies (comparables had P/E range of
12-40 times). In our DFCF model, we derive a combined company target of $19.51. We derive our 12-month target of $20 based on the average
of the two methods.
Key Risks to Target Price: We believe the key risks include any factors which affect Visudyne & Eligard sales (including events related to
regulatory, clinical, reimbursement, supply, and competition) and the integration of Atrix.
Conclusion: QLT held its 2004 Analyst-Investor day. We believe the event provided a good overview of QLT's marketed and pipeline
products. However, we did not hear any new information that affected our valuation assumptions. We continue to believe that the key drivers
to QLT share price will be 1) Visudyne sales, 2) Eligard sales and 3) Atrigel R&D contracts. The next major news events will be Dec. 17,
2004 when both Macugen and Eligard 6-month have their respective PDUFA hearing or response dates. Most analysts, including
ourselves, believe that Macugen will be approved with a wide-label indication in wet-AMD and subsequently launched in early 2005. If this
scenario holds true, the so-called 'Macugen Effect' could negatively affect QLT |
