I thought i would contribute a point of reference. As you know one of SEPR's strengths is antihistimanines. In this category there a four current products (Claritan, Zyrtec, Allegra, Hisminal) with one new RPR entrant later this year. In 1998 these products sold $3.6 BB which is 33% higher than 1997. There will be no generics in this market place until at least 2004. Possibly later if the DCL switch is successful or SGP is successful in getting a 3 year extension. At a reasonable rate of growth, IMO 30%-99, 25%-00, 15%-01, 13%-02, 12%-03 and 11% 04, then 2004 category sales will exceed $10 BB. Let's assume $8 BB just to be conservative. Even if Nori is a bomb, SEPR should get 7 - 15% royalty for the other 3. Zyrtec is the only hold-out, but I think they will come around. Even if SEPR loses the Allegra this should only carve .5 BB from the total sales. Let's assume an average royalty of 10% That would be $480 MM after tax or over $10 per share. This excludes all of the other products in development. I know that several of their development projects have unique risks, like Prozac (competition) Xoponex (generics) etc. But that is definately not true of the antihistimines. IMO clear sailing with only upside from my numbers if Nori works great or if the improved non-sedadating Zyrtec takes market share from Claritan with a higher royalty rate.
By the way, the formeterol news was very significant IMO. The market just doesn't care right now. This was true last year when the Claritan and Nori news were released. The market eventually comes around.
HPPOLK |
