Wednesday, September 17, 2014

Zachs ups Cipher price target to $3

May 30, 2012 by · Leave a Comment 

Zachs Investment Research has raised its price target on Cipher Pharmaceuticals (TSX:DND; OTCBB: CPHMF) to $3, with an “outperform” rating, saying FDA approval of Absorica for treatment of severe recalcitrant nodular acne is “transformational” for Cipher. The stock was ahead 14% to $1.88 Wednesday afternoon.

“It presents the clear opportunity to in-license yet another 505(b)(2)-like product for late-stage development and commercialization in 2013,” writes analyst Jason Napodano. “Cipher is now three-for-three. It’s time for U.S. investors to take notice.”

Mr. Napodano figures Absorica as a potential $200 million opportunity in the U.S., with marketing partner, Ranbaxy, planning to launch the drug in the fourth quarter 2012.

With FDA approval, Cipher will receive a $9 million milestone from Ranbaxy, of which Cipher will keep 50% after it pays sub-milestones to Galephar Pharmaceutical Research. Cipher will also receive royalties in the mid-teens on net U.S. sales and is eligible for future milestone payments, totaling $5 million net to Cipher, based on sales targets, he added.

By the end of 2012, he said Cipher will be collecting revenues from three approved products in the U.S., with a growing cash balance of over $10 million in the bank, and generating positive cash flow on a sustained basis.

Regarding Cipher’s application of its acne medication to Health Canada, Mr. Napadano expects the agency to make a decision in the first quarter of 2013. “We view CIP-Isotretinoin as a potential $10 million opportunity in Canada,” he added.

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