Lehman report
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Headline: Interneuron Pharmaceuticals: Reports Q4 and Yearend Results
Author: C. Anthony Butler, Ph.D. 1(212)526-4410
Rating: 1
Company: IPIC
Country: SEO CUS
Industry: BIOTEC
Ticker : IPIC Rank(Prev): 1-Buy Rank(Curr): 1-Buy
Price : $9 1/4 52wk Range: $33-9.13 Price Target: $33
Today's Date : 12/26/97
Fiscal Year : SEP
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EPS 1996 1997 1998 1999
QTR. Actual Prev. Curr. Prev. Curr. Prev. Curr.
1st: -0.09A -0.07A -0.07A -0.51E -0.51E - -E - -E
2nd: -0.34A -0.19A -0.19A -0.56E -0.56E - -E - -E
3rd: -0.34A -0.17A -0.17A -0.54E -0.54E - -E - -E
4th: -0.16A -1.29E -0.91A -0.57E -0.57E - -E - -E
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Year:$ -0.76A $ -1.73E $ -1.35A $ -2.18E $ -2.18E $ -0.28E $ -0.28E
Street Est.: $ -1.34E $ -1.53E $ -2.26E $ -2.33E $ -0.59E $ -0.28E
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Price (As of 12/24): $9 1/4 Revenue (1997): 66.0 Mil.
Return On Equity (97): N/A Proj. 5yr EPS Grth: 20.0 %
Shares Outstanding: 41.0 Mil. Dividend Yield: N/A
Mkt Capitalization: 379.25 Mil. P/E 1997; 1998 : N/M; N/M
Current Book Value: $3.03 /sh Convertible: - -Debt-
to-Capital: 1.0 % Disclosure(s): C, A
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* Interneuron reported Q4 and yearend results of -0.91 and -1.35 respectively.
This included $27.8 million (or 0.68) of one-time charges primarily related to
the withdrawal of Redux.
* Drivers for the stock include completion of Phase III trials during 1H98
using bucindolol in congestive heart failure,an IND for LidoDex for the
treatment of migraines and resolution to the Redux liability in early 1998.
* We also anticipate approval in 1998 of IPIC's NDA for CerAxon to treat
ischemic stroke.
* We believe that Interneuron has substantial value outside of Redux which
will be recognized upon resolution of litigation, thus we are reaffirming our
rating of 1-BUY.
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Summary
Interneuron reported Q4 and yearend results of (0.91) and (1.35),
respectively. The result was affected by $27.8 million in special one-time
charges. The charges included $10.8 million reflecting costs associated with
the market withdrawal of Redux, $3.3 million related to reserves for Redux-related
inventory, $7.5 million for litigation expenses, and the remainder the
result of a payment to be made this month to Astra Merck in connection with
the licensing collaboration for subsidiary Intercardia's bucindolol. These
results were slightly better than anticipated due to lower than expected
charges and slightly better cost control management, particularly in S,G&A.
This result, however, does not change our 1998 forecasts and we have not
included (if any is necessary) and expenses related to the liability which may
arise out of Redux-related litigation.
Conclusion
Near term drivers for the stock include anticipated approval of CerAxon late
in 1998, completion of Phase III trials during 1H98 using bucindolol in
congestive heart failure, an IND for LidoDex (a nasally administered
combination of Lidocaine and Dextromethrophan) for the treatment of migraines,
and we anticipate some resolution to the Redux liability in early 1998
following the release of data from the two trials ongoing with Redux. Onetrial, sponsored by IPIC, includes 1000 patients (those on drug versus those
absent drug) all of whom are to receive echocardiograms to asses health of
heart valves. The second trial is sponsored by American Home Products and
includes 1200 patients: placebo, those on Redux, and those on phen/fen.
Echocardiograms are also being obtained on these patients as well. It is our
judgment these data may create an early settlement of the liability claims
thus minimizing Interneuron's legal expenses. We believe that Interneuron has
substantial value outside of redux which will be recognized upon resolution of
this litigation. Our BUY-1 is reaffirmed.
BUSINESS DESCRIPTION: Interneuron is a diversified biopharmaceutical
company engaged in the development of products
that mimic or affect neurotransmitters for the treatment of neurological and
behavioral disorders.
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Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the
past three years a public offering of securities for this company. B-An
employee of Lehman Brothers Inc. is a director of this company. C-Lehman
Brothers Inc. makes a market in the securities of this company. G-The Lehman
Brothers analyst who covers this company also has position in its securities. |
