Byron’s Loe says Theratechnologies Egrifta has “Near-Blockbuster” Potential

On Friday, Theratechnologies (TSX:TH) reported its Q1 2012 results. Revenue came in at $3.19-million and the company reported a $7.48-million loss, the bulk of which was comprised of restructuring costs of more than $6-million.

The results were below Byron Capital analyst Douglas Loe’s expectations, primarily because he assigns the vast majority of the value in Theratechnologies to its lead offering, Egrifta, a therapy that injects tesamorelin to treat excess abdominal fat in HIV-infected patients.

Loe says the $2.1 million in Egrifta royalties and sales are both lower than expected, considering the product launched in Q1, 2011. Nonetheless, Loe says he is optimistic that Theratech’s royalty revenue growth for Egrifta will accelerate this year. In a research update to clients Friday, the Byron healthcare and biotech analyst maintained his BUY rating and $6.50 target price on Theratechnologies.

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Montreal’s Theratechnologies, which was was founded in 1993 is, operationally, a much smaller company today than it was just last year. Last December 7th, the company’s board decided to end a Phase 2 clinical program that was designed to evaluate tesamorelin for the treatment of chronic obstructive pulmonary disease. The company laid off 60% of its staff and says it will save an estimated $90-million over four years in an effort to be profitable by 2013.

Loe says Egrifta is only scratching the surface of what he says is “near-blockbuster” potential. He points out that the treatment currently has performed exceedingly well in pivotal studies, has no competition, and that the cost of the drug is reimbursed by many insurers. Loe also believes the treatment could be approved in Europe and Latin America as early as the latter half of 2012.

Share of Theratechnologies closed Friday down 5.2% to $2.01.

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