update from Morgan
January 10, 2007
Nektar Therapeutics
Time to Walk the Walk
Conclusion: For Exubera to reach consensus and
Morgan Stanley sales forecast of $300 million this year,
US prescriptions must reach 1.6 million, up from 10,000
logged in 2006. While PFE is launching the device to
the much larger PCP community this month, we remain
skeptical of such a meaningful newfound surge in
demand. Despite continued underperformance in
NKTR shares, we maintain our Underweight-V and see
risk to our $12 target price. While we reduced our
forecasts last year from $1.5 bn in peak to $800 million,
which compares to consensus estimates of $2.0 bn by
2010, we still see risk to the downside unless Exubera
hits our $300 million forecast this year.
What's New: . To help investors follow Exubera
scripts, we are initiating a monthly tracker that will look
at where scripts are versus where they would need to
be to hit forecasts, both in 2007 and longer term.
Although script data for Exubera have been weak to
date, expectations are for a significant ramp going
forward, now that the product has been launched in the
GP community. While the PCP market represents a
much larger commercial opportunity, we are not
convinced that Exubera will be able to meet our $300M
forecast for 2007as this will require 1.6 million scripts to
be generated in 2007 in the US (in addition to EU sales
of 30% US sales), up from around 10,000 generated in
2006. Furthermore, we are concerned about the
seeming disconnect between high manufacturing
revenue guidance and low market demand thus far.
While we understand NKTR has firm orders from PFE
through June 2007 and is not responsible for unsold
inventory, we remain unsure how low demand for the
product will affect future orders.
Implications: It’s time for PFE/NKTR to walk the walk
and not talk the talk, we believe. We maintain our
underweight view on NKTR shares based on our view
that peak Exubera expectations continue to be
unrealistic. |
