Expected Return Capital growth 15.9% Dividend yield 8.2% Total expected return 24.1% Company Data & Ratios Enterprise value $323.6m Market cap $346.4m Issued capital 166.5 Free float 100% Avg. daily val. (52wk) $2.6m 12 month price range $2.07 - $4.12 GICS sector Healthcare Equipment and Services
Price Performance
BELL POTTER SECURITIES LIMITED ACN 25 006 390 7721 AFSL 243480 DISCLAIMER AND DISCLOSURES THIS REPORT MUST BE READ WITH THE DISCLAIMER AND DISCLOSURES ON PAGE 6 THAT FORM PART OF IT.
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(1m) (3m) (12m) Price (A$) 2.56 2.67 3.46 Absolute (%) -18.75 -22.10 -39.88 Rel market (%) -14.04 -15.99 -43.59 FDA cautious on TRT Last Friday the FDA took the unusual precaution of issuing a Drug Safety Communication (DSC) in relation to all Testosterone Replacement Therapies including Axiron. Most importantly the FDA recommended patients should not stop taking the therapy without consulting physicians, hence Axiron remains on sale in all territories. What caused this action The DSC was issued following the release of two recent medical journal articles which discussed a potential association between TRT and an increased risk of cardiac events. It is important to note that both articles were observational only and not clinical trials, i.e. there was no clinical evidence to point to an association between TRT and increased risk of a cardiac event. We do not regard either study as being particularly reliable. We note that the label warnings for TRT already include the potential side affect of blood thickening and elevated risk for patients with a history of heart disease. To our knowledge there were no further safety concerns in relation to cardiac disease from the Axiron clinical trials. What next? Notwithstanding, the DSC is unhelpful. The next step is that the FDA will conduct an evaluation which will take an undetermined amount of time. We can only speculate as to its conclusions. The impact to Axiron revenues, if any, is uncertain. In the interim, all TRT therapy remains on the shelves. We retain out HOLD recommendation. Target price is amended to $2.41 from $2.65 following a roll forward of our valuation. The valuation now reflects uncertainty around the company’s US$50m milestone due in FY15. No changes to earnings at this time, however, we await a statement from the company when it emerges from trading halt.
ACR Price at posting:
$1.95 Sentiment: LT Buy Disclosure: Held
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