Roth Capital Partners has initiated coverage of Alexza Pharmaceuticals (NASDAQ:ALXA) with a “buy” rating and $10 price target, citing expectations for positive regulatory updates for Adusave in the U.S. and EU.
The stock closed at $5.47 on Monday. Alexza is a drug delivery company with late-stage Adusave for the treatment of institutional agitation.
“We expect a positive U.S. regulatory update for Adusave on the PDUFA date of Dec. 21, 2012,” writes analyst Scott Henry. “We base this positive outlook on correspondence with the FDA that indicates manufacturing as the last hurdle; progress in Europe on manufacturing could be a leading indicator for the U.S.; and our belief that the FDA is comfortable with the safety/efficacy profile (based on the FDA panel).”
He estimates approval probability at 75%. His model targets Adusave as a $200-million to $250-million revenue a year compound at its peak, which values the U.S. Adusave franchise at $8 a share.
Mr. Scott also values the non-U.S. rights of Adusave, which is partnered with Grupo Ferrer, at $2 a share, which reflects a smaller market and an already partnered product. The rest of the pipeline is all upside, and not in the current valuation, he added.