new eresearch report
Recommendation
Speculative Buy
Risk
High
Target Price
$0.10
Price (November 6)
$0.04
Potential Return
150%
52-Week Range
$0.095 - $0.03
% Below High
58%
% Above Low
38%
Shares O/S
176.05 million
Market Cap
$7.04 million
Average Daily Volume
20-Day: 135,700
150-Day: 448,400
Year-End
March 31
November 7, 2007
MISTRAL LAUNCHES ITS FIRST PRODUCT IN
CANADA: INSTILLAGEL®
On November 1st, Mistral Pharma announced the Canadian launch of its branded
product, INSTILLAGEL®, a combination anesthetic and antiseptic gel used in urology
procedures.
Mistral acquired the Canadian rights in the May 2007 acquisition of CuraMedica, and
announced Health Canada’s sales approval for INSTILLAGEL® just days later.
Non-prescription INSTILLAGEL® has been approved in over 40 countries in the
almost 40 years since its development and, with this launch, Mistral reaches a major
milestone. The Company will report its
fi rst commercial revenues in fi scal 2008 (March
31, 2008). We have projected INSTILLAGEL® sales growing to a potential $3 million
by
fi scal 2012. (see eResearch Update Report, June 19, 2007)
COMMENT:
There are few comparable products to INSTILLAGEL® in the current
market, which is estimated to be $4 - $5 million annually in Canada.
OTHER PRODUCT DEVELOPMENTS
The last quarter saw signi
fi cant activity in Mistral’s product pipeline, with licensing
developments announced for 3 drugs. A deal with La Société Thérraprouve Inc. broadens
the patent applications for gastroenterology drug MIST-B02, a product aimed at the
lucrative Irritable Bowel Syndrome market.
e
Research Mistral Pharma Inc.
2
November 7, 2007
In-licensing agreements reached in October 2007 with J. Uriach & CIA, and with CliniMed(UK)
secure Mistral’s rights in the Canadian market for allergy treatment TAMALIS® and gynecology
device INSTILLAQUILL®, respectively. Mistral intends to
fi le the necessary Health Canada
submissions for both products in early calendar 2008.
OVERVIEW
Mistral Pharma continues to make strides in its strategy of low-cost, niche-market drug development,
and is well within our original forecast for positive earnings by
fi scal 2010. Healthy INSTILLIGEL®
sales, combined with advancing TAMALIS® and INSTILLAQUILL® to market, could generate
revenues beyond our earlier expectations.
COMMENT:
Anticipated revenues from Mistral’s in-licensed drug portfolio could signifi cantly
speed the development, out-licensing, and commercialization of the company’s branded drug
products.
RECOMMENDATION
eResearch maintains its Speculative Buy rating for Mistral Pharma. The shares are suitable for
and recommended to high-risk accounts on the basis that, if the Company is able to advance its
products pipeline and be successful with its sales and marketing initiatives for its recently-acquired
pain management product InstillagelTM, we believe the shares offer above-average capital gains
potential. We are maintaining our Target Price, as determined in our Initiating Report of August 10,
2006, and con
fi rmed in our Update Report of June 19, 2007, of $0.10 per share, which represents
more than a double from current share levels.
Bob Weir
Director of Research
Update Report
eResearch
November 7, 2007
3
ANALYST CERTIFICATION
Each Research Analyst who was involved in the preparation of this Research Report hereby certifies that:
(1) the views, opinions, and recommendations expressed in this Research Report re
fl ect accurately the Research
Analyst’s personal views concerning any and all securities and issuers that are discussed herein and are the subject
matter of this Research Report; and (2) the fees, earnings, or compensation, in any form, payable to the Research
Analyst, is not and will not, directly or indirectly, be related to the speci
fi c views, opinions, and recommendations
expressed by the Research Analyst in this Research Report.
eResearch analysts on this report: Bob Weir, B.Sc., B. Comm, CFA.
Bob Weir has 40 years of investment research
and analytical experience in both the equity and
fi xed-income sectors, and in the commercial real estate industry. He
was at Dominion Bond Rating Service (DBRS) from 1994 to 2001, latterly as Executive Vice-President responsible
for conducting the day-to-day management affairs of the company. He joined
eResearch in 2004.
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RESEARCH ANALYST GROUP
Director of Research: Bob Weir / Vice President, Operations: Bob Leshchyshen
Financial Services
Robin Cornwell
Biotechnology/Health Care
Scott Davidson
Keith Lue
Marita Hobman
Transportation & Environmental Services/
Industrial Products
Bill Campbell
Mining & Metals
George Cargill
Neil Gow
Adrian Manlagnit
Oliver Schatz
Michael Wood
Energy & Utilities
Melvyn Misner
Oil & Gas
Eugene Bukoveczky
Achille Desmarais
Dick Fraser
Ross Deep
Special Situations
Asim Bukhtiar
Bill Campbell
Bob Leshchyshen
Ross Deep
Nigel Heath
Amy Stephenson
Bob Weir
Chief Economist
Beverly Brooks
For further information:
Independent Equity Research Corp.
130 Adelaide St. West, Suite 2215, Toronto, ON, Canada M5H 3P5
Telephone: 416-643-7650 Toll-free: 1-866-854-0765
www.eresearch.ca
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Mistral Pharma Inc. paid
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