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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: dr.praveen who wrote (22299)	12/21/2006 1:36:48 PM
From: tom pope	Read Replies (1) \| Respond to of 52153

Merrill's take on that news: Collaborative agreement with Genentech for ALTU-238 Altus announced a North American collaborative agreement with Genentech for ALTU-238, its once-weekly growth hormone product candidate, with an option for a global partnership. We view Genentech as a good choice given its U.S market leadership and its prior experience with a long-acting growth hormone product. The deal also validates Altus’ protein crystallization technology. Reiterate Buy. Details of the exclusive license agreement Genentech will pay all development and commercialization costs for ALTU-238 and the companies will co-promote in North America. Altus will receive an upfront payment of $15mn, an equity investment of $15mn, potential milestone payments of $140mn and “double digit” royalties on product sales. A global partnership could bring Altus additional upfront and milestone payments of over $110mn. Genentech is a good fit for Altus Genentech’s once-daily injectable growth hormone, Nutropin, is the U.S. market leader (est. ‘06 U.S. sales $377 mn), and it has prior experience with a long acting version, Nutropin Depot, which was marketed from 1999 to 2004. Expect ALTU-238 pivotal trial program to begin in 2007 Altus expects a phase III trial for ALTU-238 in adults and a phase II pediatric trial to begin in 2007. We assume a mid-’07 start, but expect more specific timing pending decisions by the new co-development committee. Reiterate Buy Altus remains a top small cap pick with two product candidates, ALTU-135, and ALTU-238 in pre-phase III development. Reiterate Buy.