This Analyst Sees Nearly 500% Upside in Avanir Pharmaceuticals (AVNR)
December 15, 2011 2:47 PM EST
Shares of Avanir Pharmaceuticals (NASDAQ: AVNR) are down 16 percent since reporting fourth quarter numbers after the close on Monday, but according to one analyst shares should be higher... much higher.
a note dated 12/13, Summer Street lifted its price target on the maker of Nuedexta from $10 to $11 while reiterating their Buy rating.
The firm noted 10,210 prescriptions were written for Nuedexta during the fourth quarter, a 99% increase over the third quarter. The treatment for pseudobulbar affect (PBA) and neuropathic pain (NP) is growing at a strong 3-4% week-over-week average pace in the fiscal first quarter of 2012. They see roughly 4,800 prescriptions in November. This would be up from 4,100 in October and just 2,746 in July.
The firm estimates that an annualized 1,200 total weekly prescriptions would cover the fixed expenses of the company'sspecialty retail and institutional care sales force.
The company also continues to work with payers to ensure reimbursement. "Beginning January 1, 2012, AVNR has agreements with three of the top five payers that manage prescription plans," the firm notes. The company expects 35% of patients will have unrestricted access to Nuedexta.
In the EU, Avanir's Marketing Authorization Application (MAA) filing was accepted on November 17 and decision is expected in June 2012 at the earliest.
The firm's $11 price target is based on a 25x multiple of their FY:15 EPS of $0.77/share discounted at 20%.
December 18, 2011, Webush sales estimates exclude the potential from the EU; Nuedexta could be approved in the EU by June 2012:
December 18, 2011 Wedbush PacGrow Life Sciences Avanir Pharmaceuticals (AVNR) FY:11 Update — Initial Evidence of NUEDEXTA Sales Acceleration in the Long-Term Care Setting; Maintain OUTPERFORM
• AVNR reported FY:11 NUEDEXTA end-user demand of $7 million representing net sales of $6.1 million vs. consensus of $5.7 million. The company reported revenues of $7.9 million and an EPS of $(0.51). It is estimated that wholesalers have between 2-3 weeks of NUEDEXTA on hand. The company has $79.5 million in cash with an estimated calendar YE:12 cash burn of $39.5 million.
• We estimate Q4:11/Q1:12 NUEDEXTA sales growth of ~30% will accelerate to ~50% Q2/Q1 as sales in the long-term care setting gain further traction. Acceleration in script growth is, in our opinion, promising; we anticipate NUEDEXTA end-user demand of $5.5 million or net sales of $4.7 million in Q1:12 and end-user demand of $39.4 million, representing $34 million in net sales for fiscal 2012. We have made minor adjustments to our model, given greater clarity into Q1:12 NUEDEXTA sales and 2012 guidance.
• AVNR confirmed on its YE:11 call that it has fully deployed a new 30-person institutional sales team to target the LTC market in the last few weeks. We believe that this consolidated effort in institutional settings (such as ALS clinics and long-term care) may lead to a more swift uptick in sales which will be noticeable in AVNR’s fiscal Q2:12 end-user demand. Recall that in our quarterly preview, we noted initial evidence of a sales uptick in the institutional setting.
• NUEDEXTA sales growth remains the key driver for AVNR shares, however additional catalysts in 2012 include: 1) potential approval of NUEDEXTA in the EU; 2) a potential regional partnership for NUEDEXTA ex-US which may be a source of non-dilutive cash for the company.
• We maintain our OUTPERFORM rating and our $5 price target. We derive our $5 price target by applying a 6x multiple to our 2015 sales estimate of ~$250 million in the US only, discounted annually 20%. We currently do not include the EU opportunity in our estimates. We also note that similarly we can arrive at our $5 price target by applying a 15-20x multiple to our 2015 fully diluted EPS of 0.68, discounted back annually 20%.