CIBC: Lev Pharmaceuticals
As of 9/27, we initiate coverage of LEVP at Sector Outperformer with a $3 tgt. We believe Cinryze, LEVP's C1 esterase inhibitor (C1-INH), will likely be approved in 1Q08 for treatment of hereditary angioedema (HAE), a small, Orphan indication. We expect LEVP to have significant pricing leverage.
LEVP recently reported positive results from 2 ph.III, placebo-controlled Cinryze trials, one in acute HAE and one in HAE prophylaxis. Cinryze demonstrated clear clinical benefits on all endpoints in these trials, with good safety. These results should be compelling to the FDA, in our view.
Other C1-INHs are in development for HAE, but we believe LEVP will likely receive 7 years of Orphan exclusivity in the U.S. for Cinryze. Non-C1-INH drugs for acute HAE could reach the market, but we believe LEVP will have 1st-mover advantage. In HAE prophylaxis, we believe Cinryze will dominate.
With the potential for Cinryze peak sales of $100M in acute HAE and $90M in HAE prophylaxis, we believe LEVP is an attractive investment opportunity at the current valuation. Our $3 price target is based on 30x our probabilityadjusted
2012 EPS estimate of $0.18, discounted 4 years.
