Radius Health Raising Target Price to $ 30

RDUS : NASDAQ : US$23.11
BUY 
Target: US$30.00

COMPANY DESCRIPTION:
Radius is a biotechnology company focused on
discovering, developing, and commercializing drugs for
endocrine disorders. Its wholly owned lead asset is
abaloparatide, in Phase 3 for treatment of
postmenopausal osteoporosis.
All amounts in US$ unless otherwise noted.
Life Sciences — Biotechnology
RAD1901 EARLY, BUT INTERESTING FOR BRAIN METASTASES
Investment highlights
$1.7B Seragon acquisition advantageous to RAD1901
Roche’s recent ~$1.7B acquisition of Seragon for its early-stage SERD
(ARN-810) suggests healthy interest in the SERD area, including
RAD1901. We also believe RAD1901’s potential to cross the blood brain
barrier could be an advantage vs. current therapies. Additionally,
RAD1901 may avoid the uterine cancer and bone loss risk associated
with AIs or tamoxifen, possibly permitting RAD1901 to earlier treatment
settings in hormone receptor positive metastatic breast cancer (MBC).
RAD1901 early, but could address ~$1.4B market in MBC
Analysis shows RAD1901 has potential to penetrate the ~$850M
hormone receptor positive MBC population and ~$540M MBC + brain
metastases market. We do not include RAD1901 in our valuation given
its early stage, but believe continued positive data could contribute to
long-term upside for RDUS.
Recent Phase I update at EORTC conference promising
New highlights from the Phase I MTD trial for RAD1901 showed
suppression of ER signals via PET scans after only six days of dosing, a
move forward towards initiating a 1b clinical trial, possibly starting
YE14. We expect top-line data from the Phase I MTD trial YE14 at
SABCS and results from the 1b trial in MBC presented at ASCO in 2015.
Raising price target to $30 from $26
We are raising our price target to $30 from $26 given prior market
expansion for injectable non-bisphosphonate drugs. We believe
abaloparatide will have better efficacy data compared to Forteo, which
could expand the market.

We are raising our US peak sales estimate to ~$820M vs. ~$650M previously.

Motley Fool Damns OPKO with Faint Praise

Opko Health (NYSE: OPK) – Friday March 28
Finally, we have hybrid diagnostic and pharmaceutical product developer Opko Health, which offers a great degree of promise thanks to a pipeline that spans a number of indications, but also looks as if its valuation may be way ahead of its potential.

On the bright side Opko has delivered a number of positives in recent months based on its pipeline. For instance rolapitant, an experimental therapy for the prevention of chemotherapy-induced nausea & vomiting, which it licensed to Tesaro (NASDAQ: TSRO) in 2010, met its primary endpoint in both of its phase 3 trials. As part of the deal when it was signed, Opko is eligible to receive up to $121 million in milestone payments as well as share in profits from commercialization in Japan. In addition, Opko has the option to market rolapitant in Latin America. Opko is also in the process of conducting a phase 3 trial of lead drug rayaldy for patients with stage 3 or 4 chronic kidney disease, secondary hyperparathyroidism, and vitamin D insufficiency, which has blockbuster potential.

So while there are good things happening with aspects of Opko’s development process, the underlying fundamentals right now are downright ugly. Despite its revenue doubling in 2013 to $96.5 million, the company’s current valuation of $3.9 billion implies a price-to-sales of about 40! Meanwhile, Opko burned through $58.2 million in cash as its loss more than tripled to $114.8 million for the full year from $31.3 million in the previous year.

Fundamentals aside, the real concern I have is that investors have already factored in stellar results from its late-stage rayaldy trial. I’m not implying that rayaldy hasn’t been demonstrated as safe or effective, because its phase 2 trial did meet its primary endpoint. However, until we know just how effective rayaldy is based on its top-line phase 3 results — due next quarter — it’s probably not wise to push Opko’s valuation near $4 billion. Call me a stickler, but I’d prefer to count my chickens after they’ve hatched.

Long story short, we have a company with a few high profile potential blockbusters, but a valuation that would imply success is a near given. That looks like a formula which implies more downside than upside potential, making it a good watchlist add for risk-taking short-sellers.

Insmed Update

INSM : NASDAQ : US$15.91

BUY 
Target: US$30.00

COMPANY DESCRIPTION:
Insmed is focused on developing novel, targeted inhaled
therapies for the treatment of serious orphan lung diseases. Its
lead product candidate is Arikace, a liposomal formulation of FDA
approved antibiotic, amikacin.

All amounts in US$ unless otherwise noted.

 

Life Sciences — Biotechnology
DATA ANALYSIS ARBITRAGE:
TOTALITY OF NTM DATA SUPPORTS
ACTIVITY, SAFETY AND APPROVAL
Investment recommendation
Reiterate BUY, $30 PT on Arikace’s potential in nontuberculous
mycobacteria (NTM).

INSM’s lead drug Arikace is an inhaled liposomal form of FDA-approved amikacin. We view the Ph2 US NTM data as
clearly positive, and culture conversion/safety data as supportive of expedited approval. Our $30 target is based on a pNPV analysis.
Investment highlights
 We see a clear, and likely abbreviated path to approval strongly
supported by culture conversion and QoL data. We think six-month
extension culture conversion, conversion over time, and QoL data to
be presented May 20th at ATS (San Diego) will support a subpart H
filing, a positive AdComm and conditional approval, given what we
see as strong clinically meaningful data in an unmet need.
 Primary endpoint statistics confounded by small numbers, unrelated
death. The sensitivity of the primary endpoint Wilcox rank sum
analysis is underscored by the change in p-value from p=0.148 to
p=0.02 when a repeated measures analysis is conducted excluding
the unrelated patient death. We think FDA’s previous strong focus
on cures/QoL (supported by our talks with KOLs) hasn’t changed.
 QDIP/GAIN gives FDA the flexibility to focus on the drug’s activity:
we think breakthrough status is highly likely. While some investors
are focused on safety, we think the lack of renal and ototoxicity and
note FDA has approved antibiotics for unmet needs with much more
problematic safety profiles (e.g. Sirturo’s black box warning

OPKO Health News Release – helps stem drift

American Urological Association (AUA) Accepts 4Kscore Test Clinical Study for Plenary Presentation at 2014 Annual Meeting

Jack A. Bass Managed accounts holds OPK

OPKO HEALTH INC(OPK:NYSE, US)

9.27USD0.02(-0.22%)Volume: 

Below Average

As of 25 Mar 2014 at 12:50 PM EDT.

 

QUOTE DETAILS

e

Open	9.41		P/E Ratio (TTM)	—
Last Bid/Size	9.27 / 14		EPS (TTM)	-0.33
Last Ask/Size	9.28 / 2		Next Earnings	5 May 2014
Previous Close	9.29		Beta	1.06
Volume	1,263,992		Last Dividend	—
Average Volume	2,971,264		Dividend Yield	0.00%
Day High	9.50		Ex-Dividend Date	—
Day Low	9.07		Shares Outstanding	412.9M
52 Week High	12.95		# of Floating Shares	221.0759M
52 Week Low	6.14		Short Interest as % of Float	20.64%

1 Day|

 

MIAMI–(BUSINESS WIRE)– OPKO Health, Inc. (NYSE:OPK) today announced that the American Urological Association (AUA) has accepted “The 4Kscore^TM Test as a Predictor of High-Grade Prostate Cancer on Biopsy” as a Late-Breaking Abstract for presentation in Plenary I on Sunday May 18, 2014 at the AUA Annual meeting in Orlando, FL.

The data accepted are from a prospective, blinded study conducted at 26 urology clinics across the United States from October 2013 to January 2014. The data confirm the accuracy of the 4Kscore^TMalgorithm in a United States population of men referred for prostate biopsy. The 4Kscore^TM algorithm, which is based on the values of four different kallikrein blood tests (total PSA, free PSA, intact PSA and hK2) plus age, DRE and prior biopsy status, was originally studied in multiple European cohorts involving over 10,000 patients.

“These are challenging times in urology as we are seeing a decline in men screened for prostate cancer with PSA, yet we know that mortality from prostate cancer has steadily declined since the introduction of PSA screening,” said Dr. Stephen M. Zappala, MD FACS of Andover Urology. “The 4Kscore^TM test offers new information on the probability of having a Gleason Score ≥ 7 cancer prior to undergoing a prostate biopsy. This is important, because we know that besides the potential side effects of biopsy such as bleeding and infection, up to 80% of prostate biopsies will either be negative for prostate cancer or will indicate a low grade disease that may be better monitored than treated. The 4Kscore^TM test will offer both the Urologist and patient new information for the shared decision-making discussion about whether or not to have a prostate biopsy.”

“Acceptance as a late-breaking abstract highlights both the quality of the clinical data for the 4Kscore^TM test and the urgent need to have a solution for more effective biomarker-based tests for managing prostate cancer risk and the disease itself,” said David Okrongly, President of OPKO Diagnostics. “We are looking forward to presenting the full US clinical trial data at the AUA meeting in May.”

“The results of the US clinical study are now complete and we are pleased to also announce that we are on track for launch of the 4Kscore Test on March 31, 2014,” said Phillip Frost, M.D., OPKO’s Chairman and Chief Executive Officer.

About the 4Kscore™ Test

The 4Kscore™ is a convenient blood test that measures the serum levels of four different prostate-derived kallikrein proteins: total PSA, free PSA, intact PSA and hK2. Levels of these biomarkers are combined with a patient’s age and digital rectal exam (DRE) status using a proprietary algorithm to calculate the probability of a finding of aggressive prostate cancer. The 4Kscore™ test is based on over a decade of research of the four kallikrein panel of biomarkers conducted by scientists at Memorial Sloan Kettering Cancer Center and leading research centers in Europe on over 10,000 patients. The information provided by the 4Kscore™ test can help facilitate the shared decision-making process between urologist and patient in determining the advisability of a prostate biopsy.

About Prostate Cancer

In 2013, over 238,000 new cases of prostate cancer will be identified and 29,720 men will die from the disease, according to estimates released by the National Cancer Institute, making it the second most deadly cancer in U.S. men. Prostate cancer is usually first detected by elevations in serum PSA. However, PSA level is often high for reasons unrelated to prostate cancer and, since an elevated PSA level often leads to biopsy, 75% of all prostate biopsies performed are either negative or indicate a low likelihood of aggressive cancer.

ABOUT OPKO HEALTH, INC.

OPKO is a multinational biopharmaceutical and diagnostics company that seeks to establish industry-leading positions in large, rapidly growing markets by leveraging its discovery, development and commercialization expertise and novel and proprietary technologies. For more information, visit http://www.opko.com.

OPKO Health Oppenheimer Coverage / Rating Outperform

Investment analysts at Oppenheimer assumed coverage on shares of Opko Health (NYSE:OPK) in a note issued to investors on Thursday, Analyst Ratings Network.com reports. The firm set an “outperform” rating on the stock.

Shares of Opko Health (NYSE:OPK) traded down 0.96% on Thursday, hitting $9.32. The stock had a trading volume of 2,367,717 shares. Opko Health has a 1-year low of $6.14 and a 1-year high of $12.95. The stock’s 50-day moving average is $8.56 and its 200-day moving average is $9.3. The company’s market cap is $3.848 billion.

Opko Health (NYSE:OPK) last released its earnings data on Monday, March 3rd. The company reported ($0.04) earnings per share (EPS) for the quarter, beating the consensus estimate of ($0.05) by $0.01. The company had revenue of $20.70 million for the quarter, compared to the consensus estimate of $23.64 million. The company’s revenue for the quarter was up 27.8% on a year-over-year basis. Analysts expect that Opko Health will post $-0.33 EP

In other Opko Health news, CEO Phillip Md Et Al Frost acquired 6,000 shares of the stock on the open market in a transaction that occurred on Wednesday, March 12th. The shares were purchased at an average price of $9.25 per share, with a total value of $55,500.00. The transaction was disclosed in a filing with the SEC, which is available at this link.

A number of other analysts have also recently weighed in on OPK. Analysts at Barrington Research raised their price target on shares of Opko Health to $11.00 in a research note on Friday, December 20th. Analysts at Jefferies Group  reiterated a “buy” rating on shares of Opko Health in a research note on Wednesday, December 18th. One investment analyst  has rated the stock with a hold rating and three have given a buy rating to the stock. Opko Health  has a consensus rating of “Buy” and a consensus price target of $12.75.

OPKO Health, Inc (NYSE:OPK), incorporated in October 1991, is a multi-national pharmaceutical and diagnostics company.

S for the current fiscal year

 

OPKO Announces Fourth Quarter and Full Year 2013 Results

OPKO Announces Fourth Quarter and Full Year 2013 Results

Fourth Quarter Revenue Increases About 30%; Full Year Revenue More      Than Doubled to $96.5 Million

Company Has Strong Liquidity, Including Cash and Cash Equivalents of       $185.8 million as of December 31, 2013

Launch of 4Kscore™ Planned in Q1 2014

OPKO Health Inc(OPK:NYSE, US)

9.61USD0.21(2.23%)Volume:

Above Average

As of 04 Mar 2014 at 9:31 AM EST.

Quote Details

Open	9.57		P/E Ratio (TTM)	—
Last Bid/Size	9.60 / 5		EPS (TTM)	-0.29
Last Ask/Size	9.64 / 7		Next Earnings	—
Previous Close	9.40		Beta	1.05
Volume	50,249		Last Dividend	—
Average Volume	3,480,807		Dividend Yield	0.00%
Day High	9.64		Ex-Dividend Date	—
Day Low	9.57		Shares Outstanding	408.0M
52 Week High	12.95		# of Floating Shares	216.217M
52 Week Low	6.14		Short Interest as % of Float	21.53%

1 Day|5 Day|1 YearMore Charts

MIAMI–(BUSINESS WIRE)–       OPKO Health, Inc. (NYSE:OPK), a multi-national biopharmaceutical and      diagnostics company, today reported operating and financial results for      its 2013 fourth quarter and full year ended December 31, 2013.

Financial Highlights

•         For the fourth quarter of 2013, consolidated revenues increased about        30% to $20.7 million from $16.2 million in the prior year period. For        the year ended December 31, 2013, consolidated revenues more than        doubled to $96.5 million from $47.0 million in the prior year. Revenue        for the year ended December 31, 2013, included $12.5 million of        revenue resulting from a strategic partnership in the field of RNA        interference with RXi Pharmaceuticals Corporation.
•         Cash and cash equivalents were $185.8 million as of December 31, 2013,        providing OPKO with liquidity to fund research and development and the        Company’s operations.
•         Cash used in operations was $58.2 million during the year ended         December 31, 2013, as compared with $25.4 million of cash used in        operations during the year ended December 31, 2012. The increase in        cash used in operations during 2013 reflects the full impact of our        August and March 2013 acquisitions of PROLOR Biotech, Inc. and         Cytochroma Inc., respectively. During 2013, we also utilized        approximately $8.8 million for transaction-related expenses.
•         Net loss for the 2013 fourth quarter was $16.8 million compared to a        net loss of $1.1 million for the 2012 period. The increase in net loss        for the 2013 fourth quarter was principally related to research and        development expenses incurred in connection with our ongoing Phase 3        clinical trials of Rayaldy™ and human growth hormone        (“hGH-CTP”), and interest expense related to the January 2013        convertible senior notes due in 2033 (the “2033 Senior Notes”), which        expenses were partially offset by $18.9 million in gains recorded on        the successful exit from strategic investments. The 2012 fourth        quarter results also included $9.7 million in net tax benefits        principally related to the acquisition of our laboratory business in        late 2012.
•         Net loss for the full 2013 year was $114.8 million compared to $31.3        million for the 2012 period. The increase in net loss for the 2013        full year was primarily related to the previously mentioned research        and development expenses related to our Rayaldy™ and hGH-CTP        clinical trials, interest expense on the 2033 Senior Notes, and        non-recurring costs related to strategic and business development        activities, as well as the following non-cash charges:
  • $36.5 million related to the change in fair value of derivative            instruments, principally related to embedded derivatives that are            part of the 2033 Senior Notes;
  • $11.5 million on losses from investments in equity method            investees;
  • $8.7 million loss from early conversion of some of the 2033 Senior            Notes; and
  • $6.9 million related to the change in fair value of contingent            consideration payable in connection with prior acquisitions.

These expenses were partially offset by $29.9 million in gains recorded      on the successful exit from strategic investments during 2013. OPKO’s      2012 results also included $9.6 million in net tax benefits principally      related to the acquisition of our laboratory business in late 2012.

Phillip Frost, M.D., OPKO’s Chairman and Chief Executive Officer,      commented, “From an R&D perspective, all of our programs are      progressing. We made significant strides in 2013 with our ongoing Phase      3 trials for Rayaldy™ and hGH-CTP; 2014 will be a pivotal year      for our development programs. We look forward to announcing top-line      results for Rayaldy™ in mid-2014 and filing a NDA during the      first half of 2015. We are also enthusiastic about the planned launch      later this month of our 4Kscore™ blood test for prostate cancer      which we believe will lead to a great improvement in the diagnosis and      management of prostate cancer.”

“Work has been continuing in our research laboratories on a program to      utilize specific oligonucleotides to up regulate protein production. A      pre-IND meeting has been scheduled with FDA in connection with the      development of the first product to treat Dravet’s Syndrome, a      congenital condition characterized by chronic seizures.”

Dr. Frost added, “During the year, we further strengthened our cash      position by exiting certain strategic investments which provided      attractive returns. Bolstered by our sound financial position, we look      forward to continuing the advance of our robust product development      pipeline of promising diagnostics and pharmaceuticals.”

Business Highlights

• Finalizing Steps Toward 4Kscore™ Launch: In         February 2014, OPKO announced successful initial results of the        clinical validation study of the 4Kscore™ test currently        underway at 21 large urology centers in the United States. The study,        involving more than 1,200 men, is now more than 50% complete and        supports the U.S. launch of the 4Kscore™ test later this month.

• Completed Patient Recruitment In The Second Phase 3 Trial of Rayaldy™:         This trial is the second of two identical randomized,        double-blind, placebo-controlled, multi-site studies for Rayaldy™        — to treat patients with secondary hyperparathyroidism (SHPT), stage        3 or 4 chronic kidney disease (CKD) and vitamin D deficiency. Top-line        results from both trials are expected in mid-2014.
• Positive Pre-Clinical Results on Long-acting Factor VIIa-CTP        Presented at the 7th Annual Congress of the European Association for        Haemophilia and Allied Disorders (EAHAD); Orphan Drug Designation also        Granted by FDA. Preclinical data presented at EAHAD on February        26-28 in Brussels, showed that OPKO’s long-acting Factor VIIa-CTP        exhibited a four times longer half-life and a four times improved drug        exposure versus Novo Nordisk’s $1.7 billion Factor VIIa product,        NovoSeven. Additionally, on February 27, 2014, the FDA granted orphan        drug designation to OPKO’s long-acting Factor VIIa-CTP for the        treatment and prophylaxis of bleeding episodes in patients with        hemophilia A or B with inhibitions against Factors VIII or IX.

• TESARO Achieves Successful Primary Endpoints in Phase 3 Trials of        Rolapitant. TESARO recently announced that two Phase 3 trials of        oral rolapitant, one in patients receiving moderately emetogenic        chemotherapy (MEC) and one in patients receiving cisplatin-based        highly emetogenic chemotherapy (HEC), each met the primary endpoint of        complete response (CR) in the delayed (24 to 120 hour) timeframe        following chemotherapy. Enrollment in the third and final Phase 3        trial of oral rolapitant, which is being conducted in patients        receiving cisplatin-based HEC, is expected to conclude during the        first quarter of 2014. TESARO anticipates that results from this study        will be available in the second quarter of 2014. Further, the clinical        trial of intravenous (IV) rolapitant is well underway, and TESARO        anticipates finalizing the dose that will provide comparable exposure        to the oral formulation by the end of the first quarter of 2014.
• Completed Acquisition of Laboratorio Arama de Uruguay Limitada:        OPKO has continued to grow its Latin American presence with the early         January 2014 acquisition of Laboratorio Arama de Uruguay Limitada        (“Arama”). Arama broadens the global commercial prospects for OPKO’s        product pipeline by establishing a footprint in Uruguay that may        facilitate the Company’s future commercial expansion into neighboring         Argentina, as well as by providing another platform to commercialize        the 4Kscore™ product.
• OPKO Investee, Neovasc, Successfully Completes First Human Implant        of Tiara™ Transcatheter Mitral Valve: In early February 2014,        Neovasc Inc., announced that a human implantation of its Tiara™        transcatheter mitral valve was successfully performed on January 30th        by physicians at St. Paul’s Hospital in Vancouver, BC. The transapical        procedure resulted in the elimination of mitral regurgitation (MR) and        significantly improved heart function in the patient, without the need        for cardiac bypass support and with no procedural complications.        OPKO’s investment in Neovasc continues to appreciate.
• Exit from Sorrento Therapeutics: In mid-December 2013, OPKO        reported the highly successful exit of its investment in Sorrento        Therapeutics, Inc. The sale of Sorrento shares added to OPKO’s cash        position and represented an approximate ten-fold return of OPKO’s 2009        investment

Trading Alert : OPKO Health Moving – Short Positions Squeeezzzed

Our Health sector leading position has been gaining this week and now looks to threaten the 20 % short position.

Dr. Phillip Frost the billionaire investor must be enjoying this – as ne has been a buyer right up to this week .

Jack A. Bass Managed Accounts will have an extra coffee after the market closes.

Contact us at info@jackbassteam.com

OPKO Health Inc(OPK:NYSE, US)

9.08USD0.37(4.25%)Volume:

Above Average

As of 21 Feb 2014 at 10:05 AM EST.

Quote Details

Open	8.91		P/E Ratio (TTM)	—
Last Bid/Size	9.06 / 5		EPS (TTM)	-0.29
Last Ask/Size	9.08 / 23		Next Earnings	17 Mar 2014
Previous Close	8.71		Beta	0.84
Volume	955,205		Last Dividend	—
Average Volume	3,022,949		Dividend Yield	0.00%
Day High	9.10		Ex-Dividend Date	—
Day Low	8.83		Shares Outstanding	408.0M
52 Week High	12.95		# of Floating Shares	216.217M
52 Week Low	6.14		Short Interest as % of Float	21.13

SciQuest

SQI : NASDAQ : US$20.03
HOLD
Target: US$22.00

COMPANY DESCRIPTION:
SciQuest is the leading cloud-based procurement management firm for the healthcare, academic, and government industry sectors. The firm’s software automates contract creation, payments, order allocations, inventory management and analytics of
procuring with suppliers. The firm is headquartered in Cary, NC, and has been public since September 2010

Technology — Enterprise Software — Software as a Service
ACQUIRES COMBINENET TO EXPAND OPPORTUNITIES IN THE COMMERCIAL SPACE.

MAINTAIN HOLD.
Investment thesis
SciQuest is a well-positioned firm with what we believe has a bright long-term future. However, it is also our job to help our most single most important constituents, money managers, find stocks that will produce excess returns and for the next few months. On that front we expect SQI shares to continue to mark time until organic growth reaccelerates. Maintain HOLD.
Terms of the transaction. SQI will pay approximately $43M to acquire CombineNet, which consists of $26M in cash and 820k shares. With a ~$1M/month non-GAAP revenue run-rate and roughly mid-double-digit growth, the transaction is valued at just over 3x forward revenues, which we believe is a reasonable price.
Impact on estimates.

We have increased our C2013 revenue estimate by nearly $4M and have assumed, per guidance, the impact is neutral to non- GAAP EPS and FCF. We have increased our C2014 revenue, non-GAAPEPS, and FCF by $14M, a penny, and $1.5M, respectively.
About CombineNet.

We believe the acquisition is a logical extension of SciQuest’s offerings into complex sourcing, which should help the firm’s
growth initiatives in the commercial market. CombineNet will bring roughly 80 employees, a Pittsburgh office, and 88 new customers (100 in total) to SQI. The firm’s average SaaS deal is in the $100-125k/year range.

Hologic

HPV/LSIL On Pap Smear ThinPrep liquid-based Pap. Normal squamous cells on left; HPV-infected cells with mild dysplasia (LSIL) on right. See also File:Low-Grade SIL with HPV Effect.jpg – Another example of LSIL with HPV changes. File:High-Grade SIL.jpg – High-grade squamous intraepithelial lesion (HSIL). (Photo credit: Wikipedia)

HOLX : NASDAQ : US$20.98
BUY 
Target: US$26.00

COMPANY DESCRIPTION:
Hologic is a women’s health company that offers medical imaging, diagnostic and therapeutic products to hospitals, imaging clinics, private practices, and labs through a 625-rep direct sales force as well as select independent distributors. The company develops and markets products that address a range of women’s health concerns, including breast cancer, cervical cancer, menorrhagia, osteoporosis and preterm birth and others.

APTIMA HPV GETS ENDORSEMENT
Investment recommendation
Reiterating BUY following Thursday’s announcement that Hologix and Quest Diagnostics entered into a five-year, non-exclusive agreement for
women’s health testing. Quest, already a user of ThinPrep, looks to add HPV, CT/NG, and Trich.
Investment highlights
 Better late than never for Aptima HPV. We view the Quest agreement as a strong endorsement for the HOLX Aptima HPV test and believe it should serve as a testament to other labs.
 Possible lateral implications to competitive landscape. We believe Quest may look to standardize tests and suppliers under its Invigorate program, possibly resulting in HOLX capturing more CT/NG and HPV business at the expense of BDX and QGEN,
respectively.
 No change to estimates. We estimate another six months for Quest to offer Aptima HPV. Given, we already model 2014 HPV sales of $55M, +90%, our estimates stay intact for now. However, additional contracts could spur upside to estimates.
 Aptima HPV offers fewer false positives. Recall that the Aptima HPV test (CIN3=95.7%) showed sensitivity similar to HC2 (95.3%) while
superior to cytology (73.3%). Specificity for Aptima (CIN3=90.3%) compared with cytology (90.8%), while HC2 was lower (84.9%).
Valuation
Our $26 price target assumes a 16.8x multiple on our C2013E EPS of $1.55.

Related articles

• Hologic expands collaboration with Quest Diagnostics (bizjournals.com)
• Hologic (knogimmicks.com)
• HPV Testing and Cervical Screening: is the #HPV Test better #Cancer Screen Method than Pap Smear? (desdaughter.wordpress.com)

Hologic

Hologic (Photo credit: Wikipedia)

HOLX : NASDAQ : US$20.66
BUY 
Target: US$26.00

COMPANY DESCRIPTION:
Hologic is a women’s health company that offers medical imaging, diagnostic and therapeutic products to hospitals, imaging clinics, private practices, and labs through a 625-rep direct sales force as well as select independent distributors. The company develops and markets products that address a range of women’s health concerns, including breast cancer,  cervical cancer, menorrhagia, osteoporosis and preterm birth and others.

Investment recommendation

HOLX missed FQ2/13 results on the top line and lowered its FY/13 outlook on the top and the bottom. Despite the miss, we see favorable risk-reward in HOLX shares LT, driven by better-than-expected synergies with respect to the GPRO integration, looming conversion to higher price 3D tomo from 2D, and deleveraging of the balance sheet.
Investment highlights
 2Q results. HOLX beat our EPS estimate by 2 cents but missed on revenue by $16M; and more importantly lowered its outlook for F3Q and FY’13.
 Revenue shortfall. The ~$18M revenue shortfall from the midpoint of guidance resulted from ThinPrep restructuring in China ($8M impact);
U.S. ThinPrep utilization softness ($4M); and tight capital spending budgets ($6M) for 2D.
 GPRO update. The GenProbe Dx business grew 6% pro forma, below our expectations, driven by Women’s Health MDx (+10%) partially offset by
2% growth in blood screening.
 Guidance/model. HOLX lowered FY’13 rev. guidance by $85M at the midpoint to $2,530M – $2,550M from $2,610M – $2,640B, and FY’13 Adj.
EPS by $0.04 at the midpoint to $1.54-1.56 from $1.58-1.60. We lower our FY’13 revenue estimate to $2,541M from $2,630M and FY’13E EPS to
$1.54 from $1.58. We lowered FY’14E revs to $2,662M from $2,801M and FY’14E Adj. EPS to $1.65 from $1.77.
Valuation
Our $26 price target assumes a 16.8x multiple on our C2013E EPS of
$1.55.

Related articles

• Hologic sells off LIFECODES unit in $85M cash deal (bizjournals.com)
• Healthcare Sector Roundup: Hologic (NASDAQ:HOLX), Insulet (NASDAQ:PODD) – HOLX, PODD, JNJ, AVEO, CYTK, GALE (estocksdaily.com)