Access Pharma: maintain outperform rating and reiterate price target of $8
Third Quarter Financials Are Expected to Be Better Than Our Estimates
Access Pharma (ACCP) recently updated the status of its MuGard sales.
On September 14, 2010, Access received its first commercial order for MuGard from BioScrip, its specialty distribution partner. BioScrip’s initial purchase order of MuGard was over $700,000. This amount will provide adequate inventory for its various distribution channels to support Access’ first phase of its product launch for MuGard.
Access Pharmaceuticals has inventory on hand and will begin shipping product to BioScrip immediately. BioScrip’s order represents Access’ first sales of MuGard in the US after the company officially launched MuGard in August 2010.
As a reminder, Access signed two distribution and marketing agreements in the US, one with BioScrip and one with iMedicor/DMS earlier this year.
On September 21, 2010, Access signed a $30 million supply agreement for MuGard with RHEI Pharmaceuticals, Inc., a specialty pharmaceutical company focused on bringing proprietary medicines to the China market. Access will ensure manufacturing capacity of up to a minimum of $30 million of product in the licensed territories.
Coinciding with the signing of the above agreement, Access also approved a sub-license agreement between RHEI Pharmaceuticals and Jian An Pharmaceuticals Limited in Shenzhen, China in an effort to leverage Jian An’s extensive sales, marketing and regulatory infrastructure for the launch of MuGard in China and Taiwan.
Based on the above updates, we expect a strong initial sales ramp for MuGard, which is expected to exceed our estimates. Our initial estimate for the third quarter sales of MuGard is $0.5 million. According to management, the initial feedback from clinicians and patients has been very positive. We will update investors on the progress and feedback throughout the remainder of the year when information is available.
New Progress Has Been Made for Cobalamin Drug Delivery System
On September 29, 2010, Access announced that it has made significant progress with its proprietary Cobalamin-targeted drug-delivery program for siRNA therapies. As a result of the continued advancements made with its Cobalamin program, Access rebranded the targeted-drug delivery technology as CobaCyte™; and submitted additional patent applications for its improved CobaCyte formulations, including siRNA compositions.
Over the past months, Access’ CobaCyte siRNA application has shown significant promise. In an in vitro siRNA transfection dose-response study, Access’ CobaCyte nanoparticle carriers loaded with an apoptosis-inducing siRNA molecule showed transfection activity in hard-to-transfect cell lines with potentially better toxicity profiles compared to other reagents. Further studies including in vivo gene-knockdown studies are planned.
Additionally, Access has initiated a program whereby proprietary formulations of currently marketed chemotherapies will be developed and tested to assess CobaCyte’s ability to enhance drug pharmacokinetics and pharmacodynamics.
We are pleased to see the early progress and results in the Company’s CobaCyte drug delivery technology, especially in the siRNA space. The siRNA is a potentially revolutionary drug discovery platform and Access’ CobaCyte may play a key role in the delivery of siRNA drug candidates.
We maintain our Outperform rating on Access shares and reiterate our six to twelve month price target of $8 per share.
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