Merrill:
Coreg CR approved by FDA for full range of indications
FLML and partner GlaxoSmithKline (GSK) announced late Friday that FDA has
approved Coreg CR (carvedilol phosphate once-daily) for the treatment of
hypertension, left ventricular dysfunction due to myocardial infarction, and heart
failure. This represents the full range of approved indications for Coreg (twice
daily).
Launch timing in line with our estimates
GSK plans to launch the product during Q1 2007, which is in line with
expectations. Our model includes end-user sales estimates of $450 mm in 2007
(roughly $27 mm in revenues to FLML) based on Coreg CR capturing 28% of
combined product sales (including Coreg, generics, and Coreg CR). This
represents 75% of the switch achieved by Wellbutrin XL (best in class launch) in
its first year of launch. Please see our report dated 18 October 2006 for further
details.
We maintain our Neutral rating
FLML stock is likely to rally on this news, as this represents the company’s first
FDA approval, validating the Micropump controlled release technology. However,
following the launch of Coreg CR, we believe that investor focus is likely to quickly
return to the need to complete additional partnerships to offset operating costs
and drive the full benefit of the Coreg CR royalties to the bottom line. As we have
limited visibility on any additional partnerships, and the stock is already trading
near the upper end of our valuation range of $17-$23, we prefer to maintain our
Neutral rating. |
