Expected Return Capital growth 21.5% Dividend yield 13.3% Total expected return 34.8% Company Data & Ratios Enterprise value $320.6 Market cap $338.0m Issued capital 166.5m Free float 100% Avg. daily val. (52wk) $2.68m 12 month price range $1.76 - $3.90 GICS sector Pharmaceuticals & Biotechnology
FDA’s drug safety communication defies clinical evidence The FDA’s recent drug safety communication in relation to the use of Testosterone Replacement Therapy (TRT) is at odds with a comprehensive body of clinical trial evidence showing an inverse relationship between endogenous testosterone levels and all causes (including cardiovascular related) of mortality. Despite this, two recent journal articles, one of which appeared in the higher profile Journal of the American Medical Association (JAMA), pointed towards an association between TRT with heart attack and stroke. The FDA’s action is not considered unusual where new drugs are approved, however, TRT has been available for decades and numerous trials have continued to indicate it is safe for long term use. We suspect the FDA’s action was to appease a growing voice of public concern. Key points from clinical trials The meta analysis of dozens of trials covering thousands of patients across different jurisdictions and age groups continues to indicate TRT therapy is not only safe but leads to a material benefit in quality of life for men with lower levels of endogenous (naturally occurring) testosterone. In the retrospective association study (that is not a clinical trial) that was the subject of the JAMA article, patients were not subject to proper titration, compliance monitoring or regular follow up. For these reasons there should be significant doubts cast over the validity of its conclusions. Other similarly conducted studies indicate a major advantage in survival for patients on TRT. Investment View We retain our BUY recommendation and Price Target of $2.47. In our view the long term health benefit to the growing population of over 55’s men in the US and other key markets will outweigh known risks. Our view is consistent with the current published views of the FDA.
ACR Price at posting:
$1.81 Sentiment: LT Buy Disclosure: Held
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