Neptune Wellness Solutions Inc NEPTF

NRivers: Q4 for NTB all about pharma

[Hermes8]

https://www.northernriversfunds.com/assets/downloads/Cleland_September_2009.pdf

Excerpt >>

Q4 for Neptune should be all about pharma

I have been encouraged by some independent analysis coming from several different fronts recently. For example, there has been an analyst looking at Neptune since May. Although there can be no assurance he will pick up coverage, he has concluded that the science behind Neptune is solid, and that he is comfortable with their patent portfolio. Also, an analyst that already covers the stock (Robin Cornwell of Catalyst Research) put out a report on October 9 that highlighted developments that he is expecting on the pharma side of their business over the next 3 to 6 months.

Highlights include:

1) Robin reminds investors that cholesterol and triglyceride management are applications that receive very high valuations, even at pre-clinical and early clinical stages. He cites a number of examples: (i) Resverlogix is a company pursuing HDL-(‘good cholesterol’) boosting applications that had a $400million+ valuation in the pre-clinical stage prior to the global financial crisis; it now trades at a valuation of over $100million while in Phase I; (ii) Sirtis Pharma was acquired by GSK for $720million after a successful Phase I trial; and (iii) Esperion was acquired for US$1.3billion in 2003 after successful Phase II trials.

2) Neptune is expected to release pre-clinical toxicity, dose response and efficacy studies shortly. Looking at valuations on comparable companies, these results alone could add over $100million of value to NTB, or $2.50+/share.

3) Neptune is expected to file an Investigational New Drug (IND) application as early as December 2009. Based on the fact that “INDs for Phase I trials [in cholesterol management] have been valued at $100million to $500million”, acceptance by the FDA of Neptune’s IND could add $2.50+/share to NTB.

4) Robin concludes his analysis of the catalysts expected in Acasti and Neurobiopharm (Neptune’s two pharma divisions) by writing that “NTB shareholders could see a share price of $4.00 to $6.00 by year-end.”

I was also encouraged to see an analysis of NTB’s stock chart done by GMP Securities’ technical analysts Tina Norman and Joe Farrell: “NTB has been working off overbought pressure on both the weekly and daily momentum timeframes. During this period of consolidation, weekly RSI and MACD have both held their bullish momentum ranges…a definitive breakout above the 50-day moving average near $2.20 would trigger a new advance…our intermediate technical target exists toward the top of the 2007/2008 trading range near $5.00.”

When the technicals and the fundamentals line up as nicely as this, a solid up move is normally the result.