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Biotech / Medical : INHL - Inhale Therapeutics - Pulmonary Insulin! -- Ignore unavailable to you. Want to Upgrade?

To: deeno who wrote (212)	8/5/2004 2:18:04 PM
From: deeno	Read Replies (1) \| Respond to of 225

Merrill NKTR; $10.00; C-1-9 12-Month Price Objective: $28.00 (10-Mar-2004) EPS (Dec): 2003A -$1.34; 2004E -$0.97; 2005E -$0.77 GAAP EPS (Dec): 2003A -$1.18; 2004E -$1.30; 2005E -$0.87 Event Nektar has come under severe selling pressure today upon a story coming from an unnamed source, which indicates that Exubera may not be approvable by European agencies at this time. Analysis A story released on Reuters earlier today from the online medical news service Agence de Presse Medicale reports that Exubera may “not be licensable at this time”, citing an unnamed source. Neither NKTR nor Pfizer have commented on this story at this time. The minutes of the Meeting of the Committee on Safety of Medicines of the Medicines and Healthcare Products Regulatory Agency of the UK held on May 27 2004, state that the Committee considered: “A centralised application for which the United Kingdom were not the rapporteur. The application is for the treatment of diabetes. The Committee endorsed the view of the rapporteurs that this drug was not licensable at this time and raised further major objections. Five Members declared no-personal non-specific interests, but did not debar them from taking part in the proceedings”. At this point we are unable to determine the identity of the drug in question. In the event that it is Exubera, we would like to know the steps required to resubmit the application, and the time needed for this process. Recommendation At present, in the absence of any comment by the companies, our rating and price objective are unchanged. We would review this rating and price objective as soon as we hear from Nektar and Pfizer. Nektar’s valuation is very highly leveraged to revenues from Exubera, which was filed in March 2004 in Europe. Our current price objective of $28.00 is based on forecast global Exubera sales of $1.8 billion in 2009 (estimated to be the fourth full year of sales), EPS 2009E of $1.95, 20% discount rate and a 30x multiple (consistent with the average of a group of profitable biotechnology companies). A one year delay results in a price objective of $23.00, while a two year delay results in a price objective of $15.00. Risk factors include further delays to Exubera that could result in reduced cash reserves, and delays in clinical and regulatory progress for other proprietary and partnered products.