Friday, October 31, 2014

C. K. Cooper starts Pozen at buy

April 26, 2012 by · Leave a Comment 

C.K. Cooper has initiated coverage of Pozen (NASDAQ:POZN) with a “buy” rating and $11 price target based on the “potential value we expect Pozen to derive from a marketing agreement and FDA approval of PA32540 over the next 12-to-15 months.” The stock closed at $7.91 on Wednesday.

Analyst Ken Trbovich writes that even though the stock has appreciated significantly since the announcement of the Phase 3 trial results, “we believe significant upside remains to be realized as a result of signing a commercial partner for PA32540.” He suggests a partnership could be signed in the next six-to-nine months.

Known as “aspirin made better,” PA32540 is indicated for the secondary prevention of cardiovascular disease in patients at risk for aspirin-associated gastric ulcers.

The approval of PA32540 for marketing by the FDA represents the final hurdle to unlocking the full value of the product, he said, adding that this final commercial stage also represents the most lucrative stage of Pozen’s drug development business model.

“If the product is moderately successfully, it could generate royalty income eight-to-10 times greater than Pozen’s upfront investment of $55 million,” he figures. “Those revenues are spread out over time, but placing a value on the discounted cash flows yields a potential of between $2 and $13 a share (based on peak annual sales of between $100 million and $400 million). It is an option with real value that does not appear to be factored into the stock at current levels.”

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