I looked recently at a CS equity research report on ALIM published subsequent to the company getting "Priority Review" designation for its NDA (New Device Application) for Iluvien in the treatment of Diabetic Macular Edema from the FDA.
The CS report provided estimates for several important metrics including market size, pricing, percentage of patients needing treatment for both eyes, the percentage patients that can benefit from laser treatment, gross margins, and earnings.
Essentially, the report gives Iluvien a 75% probability of being approved by the FDA by around the end of this year, though no date has been set for a potential FDA meeting date on the application.
The report did not indicate the likelihood of a "panel" meeting ahead of the FDA vote. it seems likely that news about the scheduling of a panel meeting should be available soon of there is to be one.
The CS analysts anticipate approval of Iluvien and expect AALIM to turn profitable on an annual basis immediately in 2011, with e.p.s. growing rapidly to more than $5 per share by 2015.
It will be at least three years before the market will begin discounting 2015 earnings, and there still is a binary event (FDA Vote) as an upcoming hurdle.
I would recommend discounting the earnings projection back at a 25% rate for three years then applying a reasonable P/E multiple to that figure. Applying a 15x multiple to the discounted earnings of $2.50 per share generates a potential price target for ALIM of $37.50 per share. CS is maintaining, I believe, a $48 price target.
CS believes the company needs about 40 sales people to cover the market for retina specialists.
In sum, diabetes is a large and rapidly-growing market and ALIM has a unique treatment for what appears to be an unmet medical need.
Jay/AlexAlekhine
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