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Biotech / Medical : MGI Pharma MOGN New patents, anti cancer
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To: tuck who wrote (1706)10/13/2006 3:07:28 PM
From: tom pope  Read Replies (1) of 1826
 
Merrill seems to think it's a non-event:

Saforis Approvable, Addt’l Phase III trial requested
Saforis received an approvable letter to treat oral mucositis caused by
chemotherapy. FDA has requested an additional Phase III study which we believe
the company will not run, due to the ~$20 MM cost. However, Saforis was not
included in our valuation, therefore our price target remains unchanged at $25. We
believe the street is overly negative regarding the effect that generic Zofran will
have on Aloxi, in addition we believe stock is undervalued. Maintain BUY.
Addt’l study expensive, program termination likely
We believe MGI will not conduct an additional Ph III trial due to a ~$20 MM cost
compared to ~$40-45 MM in peak sales potential. We therefore believe the
company will terminate the program.
Saforis not included in valuation
Our $25 valuation is based on cash flows from Aloxi, Dacogen, and Gliadel, and
did not include Saforis.
Removing Saforis from model, lowering estimates
Because we believe Saforis is dead, we have removed revenues and associated
costs from our model. We had assumed Saforis revenues of $21 MM in ’07 and
$31 MM in ’08. Our ’06 EPS remains unchanged at $0.00, ’07 EPS declines to
$0.36 from $0.45, and ’08 EPS declines to $1.15 from $1.25.
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