RE:Updated Reports from Cormack and WedbushCormark - See below, nevermind the sh!tbirds adding no value.
Sample Size Increased to 650 Patients: Recall, the FDA has allowed Spectral to
increase the size of the EUPHRATES trial based upon the results observed at the
interim (184 patients, current enrolment is 271) with the caveat that the trial could
increase to no more than 720 patients (from 360). Our understanding is that trial
powering using the full 720 patients would detect a 10% absolute benefit, which is
an approvable result in our opinion. Increasing the trial size to any number that is
fewer than 720 suggests that Spectral’s PMX columns have produced a benefit that
exceeds 10%, and therefore with today’s update the trial looks like it is on track for
an approvable result. The trial is now expected to complete H1 2016. The DSMB
has been unblended to the results to date and has completed its analysis;
management remains blinded.
Very Little Clarity Provided: We are very pleased to see that the trial has been
resized to an amount that suggests that it is tracking to produce an approvable
result and we are also pleased that enrolment continues to be strong. However, we
hoped to get a better understanding about what “additional analysis” the DSMB felt
was required, and why. Please refer to our notes of January 28th and March 12th for
the background. We would have been pleased with this data release had it come
out in January (when the interim news was initially expected) and hope to better
understand what analysis has transpired between late January and today and what
implications it may have.
Investors Should View This News Positively: In our view, the release clearly
suggests that EUPHRATES is tracking for a positive outcome and given that we
believe that the PMX columns could become a very significant medical product
($1BB plus?) today’s news gives us increased confidence that the columns will
reach the market. That said, Spectral’s last cash position is not sufficient to
complete the EUPHRATES trial based upon its current size. Our view is that this
EUPHRATES update is a financeable event given the product’s potential size and
the news that the columns appear to be tracking for an approvable result.
Our confidence that EUPHRATES is on track has increased materially with this
update and as a result, we are decreasing our discount rate from 30% to 25%. This
increases our target price from $1.40 to $1.70. We maintain our Buy (S) rating.
CTW