MOGN
MGI Pharmaceuticals
Update; Aloxi Strength Continues; New Guidelines Should Bode
Well; Raising Estimates
Aloxi sales strength has continued in February following strong growth in
January. Also, we expect revised NCCN guidelines, which should be published
shortly, to further support increased usage of Aloxi at major cancer centers. Thus,
we are increasing our Aloxi sales projections and reiterating our BUY.
Based on Feb. IMS data, 45,000 units of Aloxi were sold versus ~30,000 in Jan.
and 15,000 in Dec. Even conservatively assuming flat March sales and a
wholesaler inventory reduction, it appears that 1Q04 Aloxi guidance of $12 MM is
too low. Thus, we are raising our 1Q04 Aloxi sales projection from $12.3 MM to
$15.3 MM. Also, our Street high 2004 Aloxi sales projection of $94.1 MM
increases to $97.5 MM, raising our 2004 EPS estimate to $0.08 from $0.03.
The National Comprehensive Cancer Network (NCCN) will soon be issuing new
treatment guidelines for the prevention of chemotherapy induced nausea and
vomiting. We believe the guidelines may recommend Aloxi as the treatment of
choice for moderately emetogenic chemotherapy. Since many major cancer
centers are members of NCCN, it could speed adoption of Aloxi in the
traditionally slow to adopt hospital outpatient setting thus providing additional
upside to estimates.
We anticipate that Aloxi will penetrate the market faster than expected due to a
favorable reimbursement environment in addition to providing better clinical
outcomes for patients. Thus, we believe that there is substantial upside to
estimates. In addition, we project that the company will achieve profitability
faster than many are expecting. Thus, we reiterate our BUY.
Our $61 target is based on a P/E multiple of 52x off our 2005 fully taxed EPS of
$1.17. Key risks include weaker than expected Aloxi sales due to unforeseen
effects of reimbursement changes or from generic Zofran in 2006, pipeline
failures, and higher spending.
Eric J. Ende, M.D.
Comment available.
Price: $52.38
Price Objectve $61.00
Price Objective Date 11-Feb-2004
Estimates (Dec) 2003A 2004E 2005E
EPS: d$2.23 $0.08 $1.81
P/E: NM 654.8x 28.9x
GAAP EPS: d$2.23 $0.08 $1.81
GAAP P/E: NM 654.8x 28.9x
EPS Change
(YoY):
NM 2165%
Consensus EPS: $0.01 $1.21
Q1 EPS (Mar): d$0.26 $0.14
Mkt. Value/ Shares
Outstanding (mn)
$1,731.5 / 33
Investment Rating Buy
Volatility Risk Rating High
Investment Opinion: C-1-9
Symbol/Exchange: MOGN / NASDAQ |
