PaineWebber Morning Notes
February 18, 1998
AGOURON: JANUARY SCRIP TRENDS LOOK SOLID
Elise Wang
Rating=1 (AGPH)
Closing Price=$39 1/8
Current FY EPS EST=$0.98
Next FY EPS EST=$1 .92
FY End=June
Market Cap: $1.3 billion
Shares Out: 33.2 million
52 week range: 26 3/4 - 56 1/2
AVG Daily Vol: 706,120
Cash (12/31): $117 million
Cash/share: $3.82
Book value/shr: $10.82
FY end: June - Viracept U.S. revenues
Q1A $0.11 P/E - NA
Q2A $0.15 P/E - NA
Q3 $0.41 P/E - NA
Q4 $0.31 P/E - NA
FY $0.98 40.0x
1998E Current $355MM
1999E Current $475MM
EPS P/E
FY 1999E $1.92 20.4x
FY 2000E $3.43 11.4x
CY 1998E $1.56 25.1x
CY 1999E $2.56 15.3x
==========================
JANUARY SCRIP TRENDS LOOK SOLID
KEY POINTS
1. Solid monthly scrips for January.
-For the month of January 1998, Viracept prescriptions were as follows;
-T otal prescriptions were 45,466 compared with 45,682 in December (-.05% unadjusted growth, 1.8%
adjusted)
New prescriptions were 16,887 compared Wth 17,137 in December (~1 .5% unadjusted growth, 0.8%
adjusted).
--Refills were 28,579 compared with 28,545 in December (0.1% unadjusted growth, 2.4% adjusted).
Viracept Prescriptions Aug 97 Sep 97 Oct 97 Nov 97 Dec 97 Jan 98
Total (TRX) 34,479 37,488 40,830 40,013 45,682 45,466
New (NRX) 14,217 15,116 16,099 15,455 17,137 16,887
Refills (RRX) 20,262 22,372 24,371 24,558 28,545 28,579
M/M Unadj. change (TRX) 7.7% 8.7% 8.9% -2.0% 14.2% -0.5%
Adj. Growth (TRX) 9.1% 10.6% 2.6% 8.9% 4.5% 1.8%
Growth in protease inhibitor class remains steady. January's month over month growth for the protease
inhibitor (P1) class as a whole remained steady with an increase of 0.1% (unadjusted) and 2.4%
(adjusted)~ On an adjusted basis, this represents a robust compounded annual growth rate of 33%.
--Viracept holds 30% market share. This is the second consecutive month where Viracept has broken
into the 30% market share level for total prescriptions within the RI class. As expected, Crixivan
prescriptions continue along a gradual descent, as its market share Was shaved another point to 37% of
the class.
--Recent clinical data presented at retro viral conference likely to spur growth in Viracept scrips in the
coming months. As the retrovirus meeting in early February is one of the primary AIDS research
forums, we expect that the series of positive data presented on Viracept, including twice daily dosing
(BID) regimen of Vlracept, solid efficacy results of Viracept in combination with other protease
inhibitors as well as in combination with other antiretroviral therapies, and long term efficacy data, will
Increase demand for Viracept among clinicians and patients, Consequently, we expect the positive
effect of these data to be reflected In the coming months as the information is disseminated in the
medical community~
REITERATING BUY (1) RATING
We expect increased market demand for Viracept in the coming months as clinicians and patients
become more aware of the products distinct advantages. In our opinion, we believe Viracept continues
to be viewed as the optimal first line protease inhibitor given its combination of durability and potency of
effect, ease of use, mild side effect profile, and favorable cross resistance profile. Our 12-month price
target is $65-70 based on our fiscal 2,000 EPS estimate of $3.43 using a 25-30% discount rate and a 30
multiple. The stock is currently trading at a P/E multiple of 25.1 x our 1998 calendar year estimate of
$1.56 per share.
UPCOMING MILESTONES
Marketing approval for Viracept in Japan and other countries:
Q1 1998 - Initiation of Phase Il/Ill clinical studies for MMP inhibitor (AG3340):
Q1 1998 - Clinical results of Phase 1 dose ranging study for GART inhibitor (AG2034)
H1 1998 - Selection of lead compound (rhinovirus 3C protease inhibitor) for clinical dev.:
H1 1998 - Additional clinical data on Viracept (World AIDS meeting in Geneva): Early July
RISKS:
- Stock volatility and speculative nature of biotechnology investment.
- Competition in the HIV protease inhibitpr market.
- Potential for resistance and cross resistance among HIV protease inhibitors.
- Loss of major corporate collaborations.
SOLID MONTHLY SCRIPS FOR JANUARY
Growth in protease inhibitor class remains steady. January's month over month growth for the protease
inhibitor (RI) class as a whole remained steady with an increase of 0.1% (unadjusted) and 2~4%
(adjusted). On an adjusted basis, this represents a robust compounded annual growth rate of 33%.
Table 1 below shows monthly prescription trends. Table 2 shows the month over month adjusted growth
rates, indicating that all prescriptions growth rates were adjusted up 2.3% to reflect changes in the
weekday calendar structure in January 1998 compared to December 1997.
Table 1: Protease Inhibitor Market - Total Prescriptions (unadjusted, in absolute numbers)
Aug 97 Sep 97 Oct 97 Nov 97 Dec 97 Jan 97
Viracept 34,479 37,488 40,830 40,013 45,682 45,466
Crixivan 56,000 55,000 60,000 55,000 57,600 56,088
Invirase 26,747 26,443 26,865 24,715 23,987 20,795
Norvir 15,321 15,500 17,233 16,543 19,144 20,316
Fortovase - - - 1,000 6,153 9,990
Total 132,547 134,431 144,928 137,271 152,566 152,655
Table 2: Protease Inhibitor Market - Month over Month Adjusted Growth Rates (TRX)
Aug 97 Sep 97 Oct 97 Nov 97 Dec 97 Jan 98
Viracept 9.1% 10.6% 2.6% 8.9% 4.5% 1.8%
Crixivan -6.8% 0.1% 2.8% 2.6% -5.0% -0.3%
Invirase -0.2% 0.8% -4.7% 2.9% -12.6% -11.0%
Norvir 3.6% 3.1% 4.9% 6.9% 6.0% 8.4%
Fortovase NA NA NA NA 505.6% 64.7%
Total -0.6% 3.3% 1.5% 5.6% 1.4% 2.4%
Norvir/Fortovase trends continue along - bodes well for future combination use with Viracept.
Increased use of this combination of two PIs is belcoming more reflected in the prescription data. In
January, Norvir and Fortovase prescription trends surged 8.4% and 64.7%, respectively (adjusted
growth rates) while Invirase fell 11% (adjusted). We believe that as more positive data from studies of
Viracept in combination with other PI's become available, Viracept will increasingly be used in a double
PI regimen. |
