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Biotech / Medical : MGI Pharma MOGN New patents, anti cancer -- Ignore unavailable to you. Want to Upgrade?

To: Icebrg who wrote (1568)	5/9/2005 9:34:48 AM
From: tom pope	Respond to of 1826

Thanks, Erik, here's the full item for those who are interested. The analysis sounds almost gloomy. MGI Pharma (MOGN, C-1-9, $22.94) Our price target of $32 is based on a P/E multiple of 34x (PEG ratio of 0.95x our projected 5-year growth rate of 34%) off our new 2006E fully taxed EPS of $1.01. Our target PEG ratio of 0.95x, a 33% discount to the group, reflects higher risk associated with achieving our higher 5-year growth rate, which assumes approval and launch of Dacogen, Saforis and Zyc101a. MOGN faces several key risks in reaching our price objective. First, the competitive landscape for Aloxi sales is evolving and Aloxi may not maintain or increase market share or revenues. In the hospital setting, generic antiemetics, such as generic Zofran, are expected to launch in 2006 and may temper Aloxi market share growth. Aloxi pricing has declined due to recently signed new contracts resulting in bulk discounted purchases as well as the company providing discount to first time buyers. Pricing is expected to continue to decline through the middle of 2005, but may not recover if the competitive landscape does not support price increases. In addition, the company may provide payment term incentives to purchasers, which may lead to increasing DSOs and may require additional allowances for bad-debt expense and/or negatively impact cash flow if customers fail to pay in a timely fashion. Key near-term risks for the pipeline include failure of Dacogen to receive FDA marketing approval. While Dacogen met one of its two co-primary endpoints in the Phase III study of MDS, FDA may not agree with the company’s data analysis and may not grant approval. In addition, the FDA may decide that further trials are necessary prior to granting approval. Further, there is risk in that SuperGen ran the clinical trial program possibly leading to potential questions regarding the quality of the data. However, MOGN independently reviewed the data and is handling the FDA filing and submission. We believe that MOGN managing the FDA filing process is favorable, in that SuperGen previously had an unfavorable result at the FDA with an different product. Should Dacogen receive approval, physicians may prefer currently marketed drugs over Dacogen, and sales may never gain traction.

To: Icebrg who wrote (1568)	5/9/2005 9:37:51 AM
From: tom pope	Respond to of 1826

Just a minute, here's another MOGN item. This from Ende, the other was from the "morning meeting notes". MGI Pharma Opinion and Estimates Upgrade; Upgrade to BUY; Dacogen Underappreciated & Aloxi Risks Discounted UPGRADE TO BUY: We upgraded MOGN to BUY from NEUTRAL with a price objective of $32. We have increased confidence that Dacogen will receive FDA approval in Sept. and will provide the next leg of EPS growth. Importantly, we believe the stock adequately reflects Aloxi sales risk. Estimate 70-80% CHANCE OF DACOGEN APPROVAL: We believe Dacogen has a 70-80% chance of FDA approval for MDS by Sept. 1st based on a phase III trial with a response rate of 17%, which is similar to the 16% RR for which Pharmion’s Vidaza was approved. STRONG DACOGEN DATA AT ASCO: Also, we believe data from a study testing a more convenient dosing schedule for Dacogen in MDS could be presented at ASCO in May, which may suggest better efficacy than Vidaza. RAISING DACOGEN & EPS ESTIMATES: We estimate that 11,000 MDS patients in the US are eligible for aggressive therapy each year, potentially providing Dacogen sales of $200 MM by 2010. We raised our Dacogen and EPS estimates to reflect our increased confidence in the product. ALOXI RISK PRICED IN: Although Aloxi sales growth have slowed, we expect the drug to continue gaining share, albeit at a slower pace. Importantly, we believe the stock reflects much of the risk associated with significant competition, slow market growth, price erosion, and the recent increase in days sales outstanding (DSOs). In addition, we believe the stock accounts for little upside potential, which could occur with additional oncology clinic contracts. Eric J. Ende