AEterna Zentaris has triple-digit upside, says Euro Pacific Canada
DECEMBER 11, 2015 BY NICK WADDELL 0 COMMENTS
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A new financing from AEterna Zentaris (TSX:AEZ, Nasdaq: AEZS) gives the company the cash to fund its ongoing pipeline initiatives, including its lead value driver Zoptarelin, to data, says Euro Pacific Canada analyst Doug Loe.
On Wednesday, AEterna Zentaris announced it had priced a public offering of its stock at (U.S.) $5.55 a share. The financing, which the company says it expects to close on or about December 14, would net it approximately (U.S.) $15.0-million. Management says it will use the cash to continue it drug development activities and potentially add new products to its portfolio.
Loe says AEterna Zentaris has stabilized its financial risk, but for him the company’s story is all about one drug. The analyst says there is no denying that endometrial cancer is a challenging market, but notes that there are few competitors on the horizon for Zoptarelin, even in Phase II testing.
“Our investment thesis on AEZ/AEZS is unchanged, with valuation entirely driven for now by Zoptarelin royalty revenue projections, obviously based on our expectations that the drug could perform well in the ongoing Phase III advanced endometrial cancer trial; for now we do not overtly incorporate macimorelin into our valuation though the agent certainly has a strong probability of generating positive Phase III data (it did after all perform as expected to elevate blood GH levels in prior Phase III studies, despite FDA review thereafter (Complete Response Letter in Nov/14 questioned verifiability of some data, probably the data generated by innovator Ardana (Private) from which AEterna acquired macimorelin back in Jun/09),” he says.
In a research update to clients today, Loe maintained his “Speculative Buy” rating and one-year target price of (U.S.) $14.50 on AEterna Zentaris, implying a return of 210 per cent at the time of publication.
Loe says he still assumes Zoptarelin could be FDA-approved and launched by the second half of 2018. |
