Two items: FDA mandates expanded warnings on sleep medications for next-day drowsiness, driving while impaired, nocturnal meandering--ironic that Ambien, which was specifically hit with sleep walking events, has now tarred SEPR and the sector.
2nd, GS lowers L estimates on lower revenues (L), increases EPS slightly on higher revenues for X-HFA and better margins, but lowers PT on sector multiple contraction:
[EDIT to include snip from FDA:]
WASHINGTON, March 14 (Reuters) - The U.S. Food and Drug Administration on Wednesday ordered sleep disorder drugs to carry stronger warnings about their risks, such as drowsy driving and severe allergic reactions.
The warning, which applies to prescription sedative-hypnotic medications, targets 13 drugs....
Dr. Steven Galson, head of FDA's Center for Drug Evaluation and Research, said many of the drugs can be used safely but post-marketing data pointed to some concerns.
"After reviewing the available post-marketing adverse event information for these products, FDA concluded that labeling changes are necessary to inform health care providers and consumers about risks."
Those risks can include doing various activities such as driving, eating and talking while asleep without any recollection afterward, the FDA said. Severe allergic reaction known as anaphylaxis, and severe facial swelling, or angioedema, can also occur, even with the first dose.
The FDA also recommended that manufacturers of sleep drugs conduct trials to see how often the risks affect patients taking their particular product.
"Although all sedative-hypnotic products have these risks, there may be differences among products in how often they occur," the agency said. [Well, yes indeed, but let's tar all of the products with the same brush.]
FROM GS:
<What's changed
We are raising our 2007-2010 EPS about $0.01-$0.02, after adjustments
from the 10-K and recent IMS prescription trends. Our new 2007-2010 EPS
are $2.44, $2.74, $3.55, and $3.75, respectively (from $2.42, $2.72, $3.54,
and $3.74). We maintain our Neutral rating.
Key changes: As a result of recent prescription trends, we have reduced
our 2007 Lunesta revenue estimates and increased our Xopenex HFA
estimates. The net effect is a slight reduction in total revenues. We have
also revised our gross margin model in light of recent 10-K disclosures,
resulting in higher gross margin estimates. Our higher gross margin
assumptions offset our revenue declines, leading our EPS estimates
higher.
Implications
Our 2007 EPS estimate of $2.44 is above management’s guidance of $2.25,
based on higher revenues. The consensus estimate of $2.37 is also above
guidance, but it appears to be driven by spending assumptions as the
consensus revenue estimate is in line with company guidance.
Important catalysts for this year include the launch of generic Ambien on
April 21 (which could threaten Lunesta trends) and the initial CMS decision
on Xopenex UDV Medicare reimbursement on June 20 (final decision in
September).
Valuation
Our new twelve-month price target is $55, down from $59. Our price target
is based on relative P/E valuation (70% weight) and discounted cash flow
analysis (30% weight). The decline in our price target is primarily the result
of sector multiple contraction.
Key risks
Key downside risks include Ambien IR competition and Xopenex UDV
reimbursement. The key upside risk is M&A target potential.> |
