Part 2.
09:58am EDT 12-Oct-98 Volpe Brown Whelan & Co. (David M Steinberg 415-274-442
ZONA: Impotence Conference (part II of II)
Volpe Brown Whelan & Company
Zonagen, Inc. October 12,
1998
ZONA -- $15 5/8
Meeting
David M Steinberg 415-274-4428
david.steinberg@vbwco.com
Rhett Brown 415-274-4496
rhett.brown@vbwco.com
EPS 1997A 1998E 1999E Investment Opinion BUY(2)
Q1 $(0.62) $(0.53)A $0.00 Price Target $45
Q2 $(0.65) $(0.06)A $0.00 52-Wk Price Range $45 3/4-$12 1/4
Q3 $(0.57) $(0.05) $0.00 Shares Out. (million) 11.3
Q4 $0.15 $0.10 $0.00 Market Cap. (million) $176.7
Year(Dec) $(1.46) $(0.53) $1.91 3-Year EPS Growth Rate NM
First Call $-0.68 $0.67
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ZONA: Impotence Conference (part II of II)
In terms of other oral products in development, Dr. Heaton presented the
results from a 457-patient pivotal Phase III study with apomorphine, which
is being developed by TAP Pharmaceuticals. These data were generally
positive, largely confirming the interim results that had been presented
previously. Specifically, 66.1% of patients on the highest dose (6 mg)
achieved an erection sufficient for intercourse versus 35.7% patients on
placebo, while 58.9% of patients on the 4 mg dose had a positive response
versus 40.3% of patients on placebo. Partner satisfaction rates also
showed correspondingly positive trends. Despite these positive results,
the side-effect profile of apomorphine at the highest dose still appeared
somewhat significant, with 17% of the patients reporting vomiting. The
incidence of this side effect did decline with repeated use and lower
doses, with 6.4% of patients on the 4 mg dose reporting vomiting. A second
pivotal Phase III trial is currently ongoing. Abbott Laboratories
anticipates a new drug application (NDA) filing for this promising
treatment during the first quarter of 1999.
In summary, information from this symposium confirmed our view that oral
therapy for MED is dramatically transforming the treatment of this disease
and is creating significant commercial opportunities for a number of
companies. While Pfizer has obviously established itself as the dominant
entity in this emerging pharmaceutical category, other companies with
non-invasive drugs should also make a significant impact on this
marketplace due to unique attributes of their products. To this end, we
continue to believe that Zonagen's Vasomax, which will be marketed on a
worldwide basis by Schering-Plough, should have certain advantages over
Viagra (namely, a more rapid onset of action and use in men taking
nitrates) that will enable it to gain a significant share of the MED
market over time. Both presentations at this conference and conversations
with urologists support this view.
With the NDA filing for Vasomax now in place, we would anticipate FDA
approval no later than mid-July 1999 given that the agency has 12 months
to respond to NDA filings under current Prescription Drug User Fee Act
guidelines.
INVESTMENT IMPLICATION: Given the Company's $116.7 million technology
valuation (market capitalization less $60.0 million in cash) and the
strong product potential of Vasomax, we think that current price levels
represent an excellent entry point for investors. Our 12-month price
target is $45 per share. BUY (2)
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Additional information is available on request.
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The information in this report is based on sources we believe to be
reliable but there is no guarantee that it is complete or accurate. It is
not to be deemed an offer or solicitation on our part with respect to sale
or purchase of any securities. The opinions expressed reflect the judgment
of the author(s) at this date and are subject to change. VBW&Co, its
partners, and/or employees may be long or short securities described and
may make purchases or sales of them from time to time while this report is
in circulation. Should you have any specific investment questions, please
contact your VBW&Co registered representative.
Date of previous comment: 09/25/98
Volpe Brown Whelan & Company. Member SIPC. © 1998
First Call Corporation - all rights reserved. 617/345-2500
END OF NOTE
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