Ed,
Following is the story.
Q1: Has patient population at retinal specialists polled grown with all the publicity eyecare has been getting lately?
Q2: Forecasted revenues have been far short of the mark since Visudyne sales started; forecasts for next few quarters by ledink remain unchanged; whatever makes them think that their vision for 2 years and further out are likely to be even as precise as their current myopic view?
Ian.
+++++++++++++
QLT Stk Dn: Poll Shows Fewer Visudyne
Candidates
By ANDY GEORGIADES
Of DOW JONES NEWSWIRES
TORONTO -- Analysts at Leerink Swann & Co. said they lowered their
rating on QLT Inc. (QLTI) Wednesday after a poll they conducted
showed a sharp decrease in the number of potential patients for Visudyne,
the company's core product.
Robert Uhl and Navroze Alphonse of Leerink Swann said their latest poll
of 40 retina specialists, with practice sizes ranging from 180 to 11,000
patients a year, showed 16% to 17% of patients were Visudyne
candidates. "Prior to that, they'd been telling us 26% to 27%, so that's a
big drop," Uhl told Dow Jones.
As a result, the analysts lowered their rating on QLT to "hold" from
"speculative buy."
The downgrade has sent QLT sharply lower. On Nasdaq, the stock is off
7 7/8 to 56 1/16 on about 3.4 million shares. That puts the two-day drop
in the stock at 19%.
Why doctors have changed their attitudes toward the treatment is
unknown.
"We can't really explain why that is, but it's a big change, (and) we had to
change our sales estimates in the out years," Uhl said. The analysts don't
expect to revise their third-quarter or fourth-quarter estimates.
Company officials weren't immediately available for comment.
Visudyne is the only treatment for age-related macular degeneration, which
causes blindness, and has already been approved by the U.S. Food and
Drug Administration. The market for such treatments is estimated at $1.7
billion annually in the U.S. and Europe.
Company Web Site: qlt-ptd.com
Leerink Swann & Co. analysts Robert Uhl and Navroze Alphonse wrote
in a research report, in which they downgraded QLT Inc. (QLTI), that the
drop in the most recent poll of doctors is in contrast to three previous
polls.
However, they noted the latest poll also showed Visudyne orders are
increasing and that retreatment rates are also "strong." Still, they can't
ignore the physicians' downward trend, which shows there's still "a lot of
risk to this story."
"We have adjusted our out-year end-user Visudyne estimates to account
for the change in sentiment among our consultants, and our estimates now
call for U.S. market penetration of 18%, 22% and 25% in 2001-2003,
respectively, down from 24%, 33%, and 37%," the analysts wrote.
Although the company doesn't assign price targets to stocks with a "hold"
rating, Uhl estimates $50 to be "fair value" for the shares given the current
information. Their previous target was $90.
Matthew Geller, analyst at CIBC World Markets, said his opinion on QLT
hasn't changed. "The stock has been affected by analysts who didn't listen
to the company's guidance in the first place," he said, not referring to Uhl
or Alphonse specifically.
Geller said he commends the company's guidance, and reiterated he's
"very comfortable" that QLT's end-user sales will total $30 million for the
third quarter and $40 million for the fourth quarter.
"I think the product is doing very well," he said. "They're broadening their
indications, so I think there's good evidence that this product is going to
have very strong long-term growth."
As reported, QLT announced Tuesday it filed an application for Visudyne
therapy in Europe for eye diseases other than age-related macular
degeneration.
Geller continues to rate QLT a "strong buy" with a $100 target, and called
it "one of the most attractive investments in biotech." He added that dire
predictions have been made for Visudyne before, and all were proved
false.
"People said the product wouldn't get approved, it got approved. They
said it had bad side effects, it didn't have bad side effects. They said it
wasn't that effective, it turned out to be very effective. They said it would
be approved later than it was. That didn't happen," he said.
Meanwhile, Yorkton Securities raised QLT's rating to a "strong buy" from
"accumulate."
Sam Gerzonowicz, analyst at HCFP Brenner Securities, said he's
downgraded QLT twice since February, but not because of reduced sales
estimates. "I like the company, I like the people, I like the technology and
the approach that they have," he said, adding QLT slightly exceeded his
forecasts in the last quarter.
What concerns him is competition.
"Everyone's model is predicated on them more or less controlling the
marketplace," he said. Because Visudyne's "statistical differences were
very small," if another company develops a better product, he questions
how revenues can be sustained.
He cited Miravant Medical Technologies (MRVT), which is in Phase III
clinical trials for its own age-related macular degeneration treatment, as a
possible competitor.
Gerzonowicz predicts sales for QLT will be "robust" next year, but in two
to four years from now, it depends on the competition, he said. |
