Morgan Joseph Triartisan has initiated coverage of Prolor Biotech Inc. (AMEX: PBTH; TASE: PBTH) with a "Buy" recommendation and target price of $16, a 240% premium over yesterday's opening price. Analyst Dr. Raghuram Selvaraju gives Prolor a value of $900 million, of which $320 million is based on the company's most advanced drug candidate alone.
Selvaraju says, "Prolor is an emerging biotechnology firm with a specific focus on developing "biobetters" and "biosimilars"; these are classified as new forms of existing approved drugs. The firm possesses a core platform technology that permits the creation of altered versions of existing biologic agents (namely, protein macromolecules) with improved pharmacokinetics, thereby enhancing their delivery, dosing convenience, safety and efficacy. In our view, Prolor represents a diversified and more risk-mitigated investment opportunity in the small-cap biotechnology sector."
He adds, "Unlike many companies developing so-called generic biologics, follow-on biologics, or biosimilars, Prolor is actually trying to create novel versions of existing drugs that represent substantial and clinically meaningful improvements over the currently-marketed agents. Prolor has developed a longer-lived version of human growth hormone; the current market is estimated at roughly $3 billion annually."
Prolor's human growth hormone hGH-CTP is undergoing a Phase II clinical trial, with results due by August. The company is also developing a longer-lasting version of Factor IX, a crucial element in the blood clotting cascade, for treatment of hemophilia B; a long-lasting beta-interferon product candidate for potential treatment of multiple sclerosis; and a novel peptide known as oxyntomodulin for treatment of diabetes and obesity.
Selvaraju concludes, "The rapidly increasing appetite of larger pharmaceutical firms for exposure to the biosimilars market and the attractiveness of Prolor's platform from the perspective of being able to provide justification for premium pricing should position Prolor well as a possible acquisition candidate. We believe that several of Prolor's portfolio projects would likely be of significant interest to larger pharmaceutical firms because they target large markets."
Prolor's share price 19.3% on the American Stock Exchange yesterday to $6.01, giving a market cap of $325 million, and rose 6.5% by midday on the TASE today to NIS 20.35.
Published by Globes [online], Israel business news - www.globes-online.com - on July 14, 2011
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