Analyst Reiterates 'Buy' on Cephalon
A UBS analyst reiterated
a "Buy" rating on biotechnology company Cephalon Inc., shrugging
off concerns over future sales of its painkiller Fentora.
From www.Forbes.com
By The Associated Press
September 17, 2007
NEW YORK - A UBS analyst reiterated a "Buy" rating on biotechnology company Cephalon Inc., shrugging off concerns over future sales of its painkiller Fentora.
The rating recommendation follows Cephalon (nasdaq: CEPH - news - people )'s warnings last week that four people died from using Fentora. The company told doctors in letters that the fatalities were caused by errors in prescribing the drug off-label to non-cancer patients - two of whom were being treated for headaches.
Analyst Annabel Samimy said in a note to investors that the Fentora warnings don't change her bullish outlook, even though the doctor letters were unexpected and prompted a roughly 5 percent decline in share value.
In Samimy's view, Fentora still adds about $10 to the value of Cephalon's shares.
"We believe the $4 decline in price represents an overreaction, and maintain that the warnings will have little impact on future Fentora sales," Samimy wrote.
The analyst still estimates peak Fentora sales of $370 million, explaining that she does not believe physicians will be surprised by the warning language, given that this is a logical outcome of improper use of the drug. Samimy pointed out that the drug's active ingredient has historically had safety issues.
In addition, Samimy expressed optimism over the company's August acquisition of Amrix from ECR Pharmaceuticals. She considers Amrix an improved version of current market leaders in the muscle relaxant drug class and estimates over $300 million in sales potential for the drug.
Shares of Frazer, Pa.-based Cephalon rose 75 cents to $72.99 in afternoon trading. Over the past year, the stock has traded between $55.15 and $84.83.
<< BACK TO DANGEROUS DRUG NEWS ARCHIVE
From www.Forbes.com
By The Associated Press
September 17, 2007
NEW YORK - A UBS analyst reiterated a "Buy" rating on biotechnology company Cephalon Inc., shrugging off concerns over future sales of its painkiller Fentora.
The rating recommendation follows Cephalon (nasdaq: CEPH - news - people )'s warnings last week that four people died from using Fentora. The company told doctors in letters that the fatalities were caused by errors in prescribing the drug off-label to non-cancer patients - two of whom were being treated for headaches.
Analyst Annabel Samimy said in a note to investors that the Fentora warnings don't change her bullish outlook, even though the doctor letters were unexpected and prompted a roughly 5 percent decline in share value.
In Samimy's view, Fentora still adds about $10 to the value of Cephalon's shares.
"We believe the $4 decline in price represents an overreaction, and maintain that the warnings will have little impact on future Fentora sales," Samimy wrote.
The analyst still estimates peak Fentora sales of $370 million, explaining that she does not believe physicians will be surprised by the warning language, given that this is a logical outcome of improper use of the drug. Samimy pointed out that the drug's active ingredient has historically had safety issues.
In addition, Samimy expressed optimism over the company's August acquisition of Amrix from ECR Pharmaceuticals. She considers Amrix an improved version of current market leaders in the muscle relaxant drug class and estimates over $300 million in sales potential for the drug.
Shares of Frazer, Pa.-based Cephalon rose 75 cents to $72.99 in afternoon trading. Over the past year, the stock has traded between $55.15 and $84.83.
<< BACK TO DANGEROUS DRUG NEWS ARCHIVE