Dundee ups Labopharm to buy

Citing a recent share pullback of 18% and an expected FDA approval of Labopharm’s Contramid trazodone, in mid-February, Dundee Securities upgraded the stock to “buy” from “neutral” but kept its 12-month price target at $2.50.

Labopharm (TSX:DDS) finished trading at $1.68 on Friday.

Analyst David Martin writes that trazodone has “unique attributes that will drive niche adoption in the large anti-depressant market, with our conservative fourth-year sales estimates reaching $103-million.”

Manufacturing problems previously cited by the FDA have been resolved and Mr. Martin is optimistic the Montreal-based company will be able to secure a marketing partner, with upfront payments estimated at $10-million to $20-million based on current market estimates.  He also figures a marketing partner will be able to shift perception of the reformulated drug “towards a new product with unique attributes of improved sleep architecture in addition to antidepressant efficacy.”