IDEV price target: $17
Indevus Pharmaceuticals, Inc. IDEV – $6.71
Buy Price Target: $17
IDEV: Earnings In-Line; Multiple Value Driving Catalysts Expected In 2007
THINK ACTION:
While Idevus' FY 1Q07 earnings yielded no surprises in terms of operating results, we gleaned incremental information which we believe confirms our bullish view on the story. All late-stage programs, including Sanctura, Nebido, Pagoclone, and Supprelin-LA remain on track to achieve important 2007 milestones. At current levels, we do not believe the Street fully appreciates the value of Indevus' late-stage assets, include programs attained in the 4Q06 acquisition of Valera Pharmaceuticals. However, as the company continues to meet milestone expectations, we believe the value of Indevus' programs will be more accurately reflected in the stock price.
KEY POINTS:
September Launch Likely For Sanctura XR. In our view, the most important anticipated 2007 event for Indevus is the approval of the company's once-daily overactive bladder (OAB) product, Sanctura XR, anticipated on the August 13, 2007 PDUFA date. Given the large amount of human data available from the first-generation product, we expect a smooth path to approval. Assuming an August approval, management has guided for a September launch, which is in-line with our previous estimates. As we have stated in the past, we believe Indevus' partner Esprit Pharma is likely in discussions with a larger urology-focused pharma for sales of Sanctura XR. Assuming such a partnership is established, we believe the boost in marketing effort to primary care physicians would result in 15% penetration of a $500 million U.S. OAB market.
Nebido PK Data On-Track For May 2007. Twenty five patients in the Nebido PK study have completed the fourth injection cycle, with the remaining 75 patients expected to finish in time to receive final PK data from all 100 patients and file an NDA in late May or early June. The dropout rate of the study remains very low—in the 13% range. It is worth noting that the company has begun exploring dosage levels other than the 1000mg per deciliter dose every 12 weeks. We believe this initiative was taken not in response to a problem with the 1000mg dose, but was due to the realization that different patient populations may benefit from a more flexible dosing schedule. If data from these new dosing regimens is available at the same time as the original 100-patient study, it is possible the company would include the supplementary data in the NDA package, which could delay the filing by three months. However, we do not view this as likely at this time.
Initial FDA Comments On Phase III Pagoclone Program Are Promising. After filing an SPA for Pagoclone, Indevus received the first round of comments from the Food and Drug Administration (FDA). We believe these initial comments centered on clarification of a few details of the Phase III trial design. We anticipate additional rounds of discussions with the FDA before the Phase III studies begin, potentially around MY07. Management stated that the FDA dialogue was shared with potential partners, which we believe may facilitate finalizing a potential partnership by YE07. As Pagoclone is clearly outside the company's expertise in urology, we continue to believe the out-licensing of this product is highly likely. |
