Byron Capital’s Loe says Oralair Makes Paladin Less Risky, Reiterates Buy

According to Paladin, numbers on grass pollen allergies in Canada are not well established, but are assumed to be comparable to European rates, which suggest that approximately 20 to 25 per cent of adults have respiratory allergies, and that 50 per cent of those people are allergic to grass pollen.

The company says Oralair, which has performed well in five placebo-controlled clinical trials involving more than 1,000 patients, would be an improvement over current therapies, which involve multiple injections of grass allergens.

Byron Capital Healthcare analyst Douglas Loe says that, despite the fact the company has been slow to bring the treatment to market since it was licensed from French pharmaceutical firm Stallergenes SA in early 2007, he is bullish on Oralair’s potential, and the addition will mitigate the risk in his forecasts. Loe believes the treatment could become a leading product in Paladin’s already diverse product portfolio, which includes Pennsaid, Tridural and Metadol. The Byron analyst says the Canadian market for the treatment “comfortably exceeds $20 million even if we conservatively assume price per patient per annual course of therapy as low as $125.”

In a research update yesterday, Loe reiterated his Buy rating and $47.50 target on Paladin. Although Oralair is now on pace for a launch in early 2013, a bit earlier than he expected, Loe made no change to his already robust revenue forecast for fiscal 2013 of $167.4 million. Loe’s target is based on 20x earnings and 9x EV/EBITDA for 2013, plus $5.30 a share for the for 44.52% controlling interest Paladin has in South African firm Litha Healthcare.

Montreal’s Paladin has been a steady and dependable success story in Canada’s biotech world. The company has more than doubled its revenue since 2007, from just under $63 to $141 million in fiscal 2011.

Shares of Paladin closed today up .2% to $39.50.