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Zalicus AŞ Message Board

  • jakobi007 jakobi007 Oct 5, 2013 10:28 PM Flag

    ZLCS + Z160 Valuation

    Just a reminder, so here it is from Jason.

    In LSR alone, Z160 could have $500 million or more peak sales potential. Other possible indications for Z160 include post-herpetic neuralgia (PHN), and off-label uses in diabetic peripheral neuropathy (DPN), fibromyalgia, and peripheral nerve pain. PHN is a painful neuropathic condition resulting from an outbreak of the herpes zoster virus, otherwise known as shingles. We see a $250 million opportunity in PHN for Z160. Larger indications such as DPN and fibromyalgia may offer another $250 million or more peak potential.

    Therefore, on a conservative basis, we think Z160 is a $500 to $750 million product, with significant upside depending on the efficacy and tolerability Zalicus or a development partner can show in pivotal trials. The peak market opportunity for the drug may be more in-line with what Pfizer was able to do with Neurontin (gabapentin), peaking at $2.7 billion worldwide in 2004, or what they are currently doing with Lyrica (pregablin), a drug most believe is no better than generic gabapentin. Pfizer sold $4.2 billion of Lyrica in 2012.

    We suspect that Zalicus will look to partner Z160 in a deal similar to the previous collaboration with Merck following results of the two ongoing phase 2a trials. Management told us partners are already knocking on the door for Z160. We think with two positive Phase 2a trials in hand, Zalicus will be able to secure a very lucrative deal. For the sake of argument, let's assume Z160 is a $1 billion drug, with a 20% chance to make it to the market in 2018. That could be worth $50 million upfront to a big pharmaceutical company in early 2014, along with $250 million in reasonable back-end potential plus a mid-teen to low-twenty percent royalty on sales. With a current market capitalization of only $82 million, we think it is fair to say that this sort of transaction is certainly not priced into the shares today.

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    • A few more weeks to go...

    • yea, assuming the data is positive, and that doesnt mean z160 will be a drug. most biotech drugs never get developed. yet we here this story all the time. sometimes you luck out with acad, but you will get burned 99% of the time. i took my profits and will continue to take profits. i learned my lesson, dont get greedy!

      • 1 Reply to tigerw1234
      • Sup Tiger...Well we would still have P3 trials anyways I believe, but in terms of P2...I feel really good about it. The data they have released showing bioavailability, efficacy, etc. If this were the P3 trials I feel that I would be more cautious. Merck dropped it because of these issues, but they seem to have fixed them.

        "Merck dissolved the partnership a year later after a phase 2 study showed bioavailability issues. Merck noted that no serious adverse events were seen even at the highest doses. Zalicus then spent the next 7 years correcting the bioavailability issues."