Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Vendit™ who wrote (7170)	3/30/2005 3:43:24 PM
From: Jill	Read Replies (1) \| Respond to of 8752

Reid: advfn.com; I think I am going to dabble in this one. It's high on hte list in ENgland but here's it pretty much ignored but from all my science writing background I think the innovations are brilliant and I might as well go with it--like I felt about Ipod. Any thots about the chart? It is retracing and that is good. I almost bot in Nov. From ABN note a few months ago - includes NTP as one of top 12 shares for 2005: Infection point In 2005, NeuTec needs to build on its impressive clinical data and move towards Mycograb commercialisation. Newsflow appears skewed to 2H05 and we expect positive regulatory progress, with Mycograb as the main focus. The stock remains our top pick. Key forecasts FY03A, FY04A, FY05F, FY06F, FY07F Revenue (£m) 0.00 0.00 0.00 7.03 37.9 EBITDA (£m) -3.39 -3.43 -9.44 -7.27 13.1 Reported PTP (£m) -2.94 -3.10 -8.36 -6.50 14.6 Normalised PTP (£m) -2.94 -3.10 -8.36 -6.50 14.6 Normalised EPS (p) -12.4 -13.1 -28.9 -22.5 50.5 Dividend per share (p) n/a n/a n/a n/a n/a Dividend yield (%) n/a n/a n/a n/a n/a Normalised PE (x) n/m n/m n/m n/m 9.77 EV/EBITDA (x) n/m n/m n/m n/m 8.42 EV/invested capital (x) n/m n/m n/m n/m n/m ROIC - WACC (%) 5242 272.1 778.7 714.8 -770.0 Source: Company data, ABN AMRO forecasts year to Jun, fully diluted Stunning Mycograb data in the bag NeuTec’s lead drug, Mycograb (invasive candidiasis), has advanced rapidly with minimal financial outlay. Impressive pivotal data released in July 2004 resulted in a strong share price performance, but the current valuation still doesn’t reflect the potential of this product, in our view. We expect EU regulatory filing in 1Q05 and EU approval in late 2005 to drive the shares. Aurograb phase III data still to come 2005 should see clinical progress with NeuTec’s other key asset, Aurograb. Aurograb targets MRSA ("Hospital Superbug") infections, which are an increasingly high profile problem. We expect initial phase III data to be released in 2H05. Aurograb has the potential to be NeuTec’s biggest selling product and early data, albeit from small clinical trials, was strikingly positive. Outlicensing deals - a potential "wildcard" Compelling Mycograb data puts NeuTec in a much stronger position in terms of licensing discussions with potential partners. The timing of any deal is difficult to forecast and we exclude any milestone payments from our forecasts and fair value. However, with pivotal data now in-hand, licensing deals may come quickly if the regulatory progress in Europe runs smoothly. We believe that a Japanese collaboration for Mycograb is the most likely candidate in the near term (2H05-2006). Valuation remains undemanding - lot of risk removed NeuTec remains our top pick in the UK sector. Although the more material newsflow remains skewed towards 2H05, we see incremental progress for NeuTec in early 2005. We believe regulatory progress in 2H05 should drive the share price towards our 950p fair value. Buy with an £8.00 price target. 0 Price £4.93 Target price £8.00 Market capitalisation £142.48m (.201.43m) Avg (12mth) daily volume £0.23m Monday 10 January 2005 * Buy Business overview NeuTec develops novel therapeutics for the treatment of life-threatening hospital acquired infections (HAIs). HAIs represent an increasingly high profile problem, accounting for 100,000 cases per year in the UK and causing around 5,000 deaths with a cost of around £1bn per year. Mycograb, NeuTec.s lead drug, is an antibody fragment for the treatment of invasive candidiasis, an acute, life-threatening fungal infection caused by Candida. Candida is one of the most common bloodstream infections responsible for around 70% of the 320,000 cases of systematic fungal infections reported globally each year. Pivotal phase II trial data was released in July 2004. Both primary and secondary endpoints were highly significant and Mycograb showed a mortality benefit, the first combination antifungal product to do so. Mycograb looks set to win solid market share and should command good terms from any partnership agreement. We forecast NeuTec will book peak revenues of £144m. Aurograb, NeuTec.s other key asset, targets Methicillin Resistant Staphylococcus aureus (MRSA), the so-called hospital superbug. In the UK, MRSA caused the death of 800 patients in 2002; a c15 fold increase in nine years. Aurograb entered Phase III trials in May 2004 and we expect initial data in 2H05. We expect Aurograb to sell £513m at peak, with NeuTec receiving a £64m royalty payment. Upside could come from NeuTec deciding to sell this product itself in Europe. Key issues Over the next 12-18 months NeuTec needs to transform from a pure play R&D biotech into a commercial operation. NeuTec took two major steps towards this goal in 2H04. ¦ In October, Alan Cooke was appointed Head of Commercial Development. This was an important hire for NeuTec, in our view. Mr Cooke spent 10 years growing sales of the start up company Vestar, which after two mergers became Gilead. Importantly, his experience there included the launch of the first liposomal amphotericin-B (anti-fungal) in Europe, which overcame the previous .gold standard.. Here he took sales from zero to US$33m, winning 82% market share. ¦ NeuTec signed a manufacturing agreement with CMC Biopharmaceuticals to provide commercial scale manufacturing capability. While exact deal terms were not disclosed, importantly management claims gross margins intact. Tight cost control has allowed NeuTec to reach this stage without the help of a partner. However, with the strong pivotal data in hand for Mycograb and a lack of interest in conducting an expensive Aurograb trial in the US, deals should be round the corner. Outlicensing deals would provide a cash injection (not included in our valuation model) and industry validation, which should drive the shares higher. Valuation Using a risk-adjusted NPV model for NeuTec, we derive a fair value of 954p. Our price target of 800p is based on our expectations for newsflow over the next six-to-12 months. Share price drivers include EU filing (expected 1Q05), potential EMEA approval (2H05), progress with Aurograb and the presentation of additional data on Mycograb at numerous scientific conferences. Downside risks to our target include regulatory delays and problems with manufacturing scale-up.