alles klar, es war Raymond A. Myers
Data Late This Year, With Approval Possible as Soon as Mid-2010
Under Fast Track Review – Novelos completed full 840-patient
enrollment as planned, in March, 2008. Timely enrollment is encouraging
because we believe this reduces the risk of unexpected side effects or other
problems involving study conduct. Enrollment continued to include nearly
900 total patients. Based on the rate of “events,” i.e. patient deaths,
Novelos anticipates reaching 725 events and reporting survival data late this
year. Previously, management had anticipated reaching 725 events in mid-
2009. Management pushed this estimate out a few months because patients
are living slightly longer than forecast. Since the study remains blinded, it
is unknown whether the increased survival may be attributed to increased
survival of the NOV-002 treated group, of the placebo group, or unrelated
factors. Still, the extended survival appears encouraging. Also favorable is
the fact that an independent data monitoring group periodically reviews the
study results for safety and efficacy, and has not stopped the trial. This is
not an affirmative indication that NOV-002 is effective, but it does mitigate
the risk of unusual side effects or clearly unfavorable survival associated
with treatment.
Recent Development Partnership Provides Capital to Complete P-III
In February, Novelos completed a development and marketing partnership
with Mundipharma and Purdue Pharma, which are related private
companies. The agreement licensed European and Asia/Pacific marketing
rights, excluding China, to Mundipharma and raised $10m in gross
proceeds through the sale of convertible preferred stock to Purdue Pharma.
We expect these funds will carry Novelos through the completion of the
phase-III lung cancer trial. Assuming that data is favorable, we anticipate
that Novelos would then be in a position to raise capital by licensing U.S.
marketing rights, or to sell equity at favorable terms.
Potential for Substantial 2009 Appreciation – We are optimistic about
Novelos shares because we continue to believe that the risk of the phase-III
data to be released by year-end is outweighed by the substantial gain that we
anticipate would be realized if these results are favorable. With 144 million
fully diluted shares outstanding, Novelos’ market capitalization is just $52m.
With favorable pivotal phase-III efficacy data in lung cancer, we anticipate
the stock could exceed $5/share, or $720m market capitalization. With
greater than a 10x return potential in one-year, we believe risk tolerant
institutional investors should own Novelos shares. Our $5 one-year price
target is based on 30x our fully taxed $0.40 EPS estimate in 2012,
discounted to 2010 at 50% annually.
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