IB Net Payout Yields Model

Savient Pharma Upgraded to $25

Savient Pharma (SVNT) has been one of our favorite biotechs this year. They are on the verge of drug approval for a gout drug that will have no competition and solves a problem that has had no cure for a long time. The stock has been weak after the FDA decided to not approve their drug after positive P3 trials due to a manufacturing issue. Its just about a no brainer for approval in that their drug provides a much needed cure regardless of some possible side effects.

Collins Stewart upgrades them on these facts. Including that a larger firm could come in and quickly wrap up the manufacturing issue and some other minor issues. The stock traded at just $14 prior to this upgrade today and continues to be an amazing bargain at these levels.

Savient Pharma: Collins Stewart believes SVNT is de-risked and attractive for any rheumatology company; tgt raised to $25 (14.21)

Collins Stewart raises their tgt to $25 from $21. Firm expects a Krystexxa approval for treatment-failure gout given the addressable C.M.C. issues in the Complete Response Letter. Firm believes SVNT is de-risked and attractive for any rheumatology company for the following reasons: 1) the CMC issues should be easily resolvable; 2) the draft label of "chronic gout patients who have failed to normalize serum uric acid and whose signs and symptoms are inadequately controlled by xanthine oxidase inhibitors at maximally tolerated doses" is broad, has no black box warnings and firm believes includes tophi; 3) the REMS is benign; and 4) few post-P3 pre-launch biologics exist. Firm models for ~7K U.S. patients (~19K (prev. ~18K) eligible-TFG patients) on Krystexxa in 2013, resulting in a ~$700 mln worldwide opportunity at peak at $50K/patient/year. Based on firm's conservative assumptions, they derive a take-out value of $25 -$35/share.

From flyonthewall:

Savient target raised to $25 from $21 at Collins Stewart
Collins Stewart expects Saveint's Krystexxa to receive approval for treatment-failure gout and thinks the company is an attractive acquisition candidate for any rheumatology company. The firm raised its target on shares and reiterates a Buy rating on the stock. :theflyonthewall


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