Nice coverage by DJN again...
Ian.
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QLT Stk Up 43%; 'Confident' Analyst
Upgrades Stock
By ANDY GEORGIADES
Of DOW JONES NEWSWIRES
TORONTO -- Investors have ignited shares of QLT Inc. (QLTI)
Thursday after the company reported its lead product, Visudyne, could
benefit a patient population twice the size as the one for which it's currently
approved.
"This is extremely good news for them," Carol Ann Werther, analyst at
Adams Harkness, told Dow Jones. On Wednesday evening she raised the
stock's rating to a "buy" from "market perform" as a result of the news.
In Nasdaq trading Thursday, QLT is up $11, or 42% to $36.94 on about
4.7 million shares.
"I upgraded the stock to a buy because we're much more confident that
our revenue estimates are achievable," she said.
QLT Inc's (QLTI) Visudyne product is an approved treatment for wet
age-related macular degeneration (AMD) in Canada, the U.S. and
Europe. But AMD, a leading cause of blindness, occurs in two forms -
classic and occult, which refer to two types of abnormal blood vessel
growth.
Visudyne is approved for the "classic" form, but the latest results from a
Phase IIIb study on patients with "occult" disease showed efficacy after 24
months.
"This was a surprise because, at 12 months, they didn't reach statistical
significance in the occult patients," said Adams Harkness analyst Carol
Ann Werther. "So what it does for the company is it at least doubles the
patient population that they can address if they can get this approved."
Werther noted that the U.S. Food and Drug Administration has yet to
approve Visudyne's expansion, but she's confident that's only a matter of
time. "They got approved last year with a narrow label, they're about to get
the label expanded this year (for pathologic myopia), and they'll probably
have another expansion next year, and all told they think they can address
two-thirds of wet AMD market, whereas previously they were addressing
less than one-third," she said.
Werther's revenue estimates for Visudyne are C$225 million in 2001,
C$363 million in 2002, and $480 million in 2003. "I have a much higher
degree of confidence that these numbers could be achieved," she said,
adding that she won't make any revisions until listening to the company's
conference call, scheduled for Thursday afternoon.
Because revenues fluctuate with Visudyne retreatment rates - which are
still unclear at this early stage - building a revenue model for QLT is
challenging, she added.
However, if this label expansion is permitted, it could boost revenues
starting in 2002, she said. Her share-price target for QLT is $44.
When asked if QLT's dependence on Visudyne and scant product pipeline
is a problem, the analyst replied, "it's a long-term concern."
"Many companies have had one single product," she said. "Pipeline is an
issue for every single company in the industry."
The latest data out of QLT Inc. (QLTI) also served as a "confidence"
booster for Kevin Tang, analyst at Deutsche Bank. In a research note, he
agreed that the market size for Visudyne could now double, and sees the
U.S. Food and Drug Administration's review lasting about six months.
He noted that occult AMD represents about 40%-50% of the market,
compared to the classic form, which comprises 20%-40% of all wet AMD
cases.
However, not all analysts reacted with the same degree of jubilation.
Leerink Swann & Co. analyst Navroze Alphonse said the data were
expected, and didn't come as a surprise to him. He said concerns about a
"smaller-than-expected patient population" and "less robust retreatment
patterns" were not alleviated by Visudyne's potential expansion.
Alphonse said occult wet AMD patients could number between
15%-40%, depending on who you ask. "Clearly, there is some uncertainty
regarding the size of the occult wet AMD market, and we make no
changes to our estimates at this time," he wrote in a research note.
Alphonse maintained his hold rating on the stock.
David Hines, president and director of research at Avalon Research
Group, disagreed that QLT Inc.'s (QLTI) Visudyne trial reached its
primary endpoint. "The primary endpoint was not efficacy at 24 months,
the primary endpoint was efficacy at 12 months, and that trial failed," he
said.
Hines described Avalon as an independent research firm with views
typically "out of consensus." He maintains a "sell" rating on QLT.
Dr. Neil Bressler, retinal specialist and chair of the Visudyne Study
Advisory Group, didn't understand Hines' logic.
"Why would the companies continue to do follow-up beyond 12 months in
these patients?," he asked. "We recognized in this disease that it's possible
we might see a benefit in one year, or it may take up to two years to see a
benefit. This was planned from the start."
Bressler acknowledged that the primary outcome wasn't reached in one
year. However, the important fact is that a beneficial outcome was
achieved in two years.
"So I don't see why, for an untreatable disease, (the FDA) wouldn't
approve that," Bressler said.
Company Web Site: qltinc.com
-Andy Georgiades |
