Join        Login             Stock Quote

Intellipharmaceutics (IPCI) Initiated At 'Buy' By Brean Murray, $7 PT

 September 11, 2012 01:55 PM

(By Balaseshan) Brean Murray, Carret & Co. analyst Jonathan Aschoff initiated Intellipharmaceutics International Inc. (NASDAQ:IPCI) with a "Buy" rating and $7 price target, saying he believes that the company's present valuation does not reflect its opportunity.

Aschoff said his 12-month target price of $7 is based on a discounted cash flow (DCF) analysis, using a 30% discount rate and an 8 multiple of the terminal value for the projected 2022 EBITDA of $168 million that fully factors in the cash needed to become profitable.

The company specializes in extended release (ER) formulations of generic active agents and difficult to manufacture ER formulations of drugs with short remaining patent lives. From the clinical data developed for Rexista, and from other ER formulated drugs successfully produced, the analyst believes that the company can turn a profit by 2015.

The analyst sees several near-term catalysts for Intellipharmaceutics, notably its second Phase 1 Rexista dataset, a potential Rexista partnership, and initiation of Phase 3 Rexista trials.

Positive Phase 1 data for Rexista could lead to a partnership that generates a significant upfront payment, the analyst noted. Also, Phase 3 initiation, expected in 1Q-2013, would clarify Rexista's potential market timing.

The U.S. market for Rexista is large, consisting of about 10 million chronic pain patients who use opioids, with the need for abuse resistant opioids already well recognized. Although about 10 million patients would be candidates for Rexista, Aschoff more conservatively estimates market potential to be equivalent to the OxyContin market in terms of prescriptions written.

The OxyContin market size is about $2.8 billion, and the analyst estimates that Rexista will be able to gain 20% of the 5.2 million OxyContin prescriptions at peak in 2021. He also assumes that other abuse resistant formulations will enter the market, causing Rexista to be priced below OxyContin, resulting in Rexista sales of about $500 million in 2021.

Intellipharmaceutics' generic business has four significant catalysts in 2013, namely potential FDA approvals of generic versions of Focalin XR, Protonix, Effexor XR, and Glucophage XR. The analyst views these products as potentially making the company profitable by 2015.

Aschoff said after these four potential 2013 approvals, the remaining ANDAs awaiting approval beyond 2013 and future ANDA filings should add significant value to the company. Intellipharmaceutics plans to be able to file four ANDAs per quarter starting in 2013.

IPCI is trading up 1.05% at $2.89 on Tuesday.



Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageOversold Airline Ready For A Quick Rebound

Trading countertrend moves can be profitable but risky, so it pays to line up as many factors as possible read on...

article imageWhat Is Your Sell Criteria?

Every stock market cycle has its darlings—the stocks investors believe can do no wrong.  I remember 1999 read on...

article imageUS Employment Growth Continued To Slow In April

Company payrolls increased by a lower-than-expected 171,000 last month, the US Labor Department reports–the read on...

article imageMake America Great Again

Our weekly commentaries provide Euro Pacific Capital's latest thinking on developments in the global read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

Recent Articles by Balaseshan
More Articles on: Medical

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.