Kos Pharmaceuticals, Inc (KOSP) Message Board

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Biotech / Medical : Kos Pharmaceuticals, Inc (KOSP)

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From: tom pope	6/22/2005 9:21:15 AM
	of 118

Merrill: Kos Pharmaceuticals Inc Company Update; Raising Price Target to $75 Raising price objective to $75. Our new target assumes that the stock can trade at roughly 24x our 2006 EPS estimate of $3.15, similar to the stock’s 2005E multiple and a modest premium to the overall specialty pharma group. We are maintaining our estimates, but increasing our target multiple (to 24x from 21x) due to recent increases in the group multiple (from roughly 19x to 22x recently). We continue to believe that the shares merit at least a modest premium to the group based on the company’s strong core cholesterol franchise and better-than-average earnings predictability. The Niaspan franchise should continue to drive growth for many years. We expect Niaspan, the most effective drug available for raising HDL cholesterol, to continue to gain market share as physicians become increasingly focused on the importance of raising HDL. While the rate of Niaspan share growth has slowed recently, we are hopeful that additional promotional support, as well as positive data flow, will drive further gains. Nearest potential competition to the Niaspan franchise is several years away. The most advanced HDL-raising product in development is Pfizer’s torcetrapib/Lipitor combination, which is at least three years from market (assuming a 2Q:07 NDA filing with imaging data and 2Q:08 approval). Kos believes that the profile for its Niaspan/simvastatin (Zocor) combination will be competitive with that of Pfizer’s product. Risks include: (1) our royalty assumptions for the Barr and Takeda deals could be low; (2) wholesaler inventory adjustments could impact reported sales in 2Q; (3) integration of the Biovail products and sales force could negatively impact Niaspan promotional activity; and (4) the FTC could challenge the settlement with Barr. Gregory B. Gilbert Price $65.29 Price Objective $75.00 Price Objective Date 22-Jun-2005

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