Wells Fargo Raises Price Target on Pozen Inc. Offers Options from Future Treximet Royalty Sale
Wells Fargo highlights three potential options that they feel would provide shareholders with the most value without undue risks, "stop all work and become a disperser of cash and future Vimovo royalty to shareholders, continue to progress PA32540 in an attempt to create more value, and with the excess cash, accelerate the PA65020 program in addition to developing PA32540. We believe management will likely choose option two."
The Wells report seems a day late and a dollar short. The bottom line is that we know the baseline cash position is $4+ alone. You add in the statement from the 8k filing that Vimovo will do $100+M in 2012 and you're well higher than their estimates....especially once you factor in future revenue flow from Vimovo. And of course PA should be valued. You don't have to be novel to get value...Orexigen and Vivus are not doing rocket science either, but if you're addressing a large market and you have an actual drug candidate then you can infer future revenue. This is just one stupid analyst...not shocking. Many of them are idiots.
But Wells is completely wrong. They're saying valuation right now is $3.50-$4. Anyone know who the analyst at Wells is? POZN just stated a few weeks ago that they would end up with at least $30M in cash by the end of 2012. So, $30M + 75M - $16.5 is about $3/share and they will be waiting on PA approval and should have a partner by then. Wells is valuing PA at $0 and valuing Vimovo revenue stream at only $15-30M (very low).
I'd like to ask the analyst why they're valuing PA at $0 and Vimovo so low. The lowest range they should be giving is $4-$6.