Message #32 From:
Stock News Bot Date: March 5, 2007 03:00:00 AM
XOMA News Zacks Analyst Blog Highlights: Xoma, Novartis, Salix Pharmaceuticals and Shire Pharmaceuticals
CHICAGO--(BUSINESS WIRE)--Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Xoma, Ltd. (Nasdaq: XOMA), Novartis (NYSE: NVS), Salix Pharmaceuticals (Nasdaq: SLXP) and Shire Pharmaceuticals (Nasdaq: SHPGY).
Earlier in the week Xoma, Ltd. (Nasdaq: XOMA) announced the termination of the exclusivity period on therapeutic antibody collaboration with Novartis (NYSE: NVS). The expiration of this exclusive obligation has allowed the company to expand its existing relationship with Takeda Pharmaceuticals to now include oncology candidates.
XOMA now estimates that the total aggregate upfront, R&D [research and development] funding, milestone and other payments could exceed $230 million before royalties over the life of the agreement. The company has earned $8 million in payments so far from Takeda.
We continue to recommend the shares at this level. Our near-term price target is $4.
Seeking Visibility on Salix Programs
Although we expect Salix Pharmaceuticals (Nasdaq: SLXP) to post decent top-line and bottom-line growth over the next few years, we remain concerned about the growth prospects of Colazal, the company’s lead product. Colazal is likely to face intense competition with the entry of Shire’s (Nasdaq: SHPGY) Lialda, and is also in danger of facing generics.
We believe that investor focus will remain on Salix’s ability to execute on its life-cycle extension program for Colazal. Valuation is attractive in our view, but we would like more visibility on the Colazal life-cycle extension program before we recommend the shares. We rate the stock a Hold, with a $15 target.
We also believe that Salix offers average risk for the biotech group, but would like to see more proof that its antibiotic Xifaxan will drive shareholder value once the posted sales begin to match the prescription trends. While the company succeeded in bringing down inventory levels for Xifaxan and Colazal, it is still a long way from achieving normal inventory levels. This remains a matter of concern. The inventory situation together with the low visibility on Colazal will probably continue to keep the shares in check. Salix shares should be protected on the downside based on the potential to post 25% top-line growth over the next several years.
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