Theratechnologies potential is dampened by regulatory risk, says Byron’s Loe

CEO Luc Tanguay said going forward the company will focus on sales of its FDA-approved HIV lipodystrophy drug, Egrifta.

“As we start a new fiscal year, we are more focused than ever,” he said. “Our revised business plan will build on growing Egrifta sales and royalties in the U.S. while we also concentrate on generating potential new revenues for Egrifta in the short term by working more closely with our partner in Latin America, working diligently at trying to refile in Europe or in individual European countries. All of those initiatives are targeted towards becoming cash neutral and providing us potential leverage for future initiatives.”

Byron Capital analyst Douglas Loe says Theratechnologies’ Q4 showed stable but unspectacular Egrifta sales performance. He says he is disappointed by the timeline for the treatment’s approval in Latin America, but optimistic that the region could start to impact the company’s books by the second half of fiscal 2013. This, says Loe, will help to balance a European market that has been a challenge since former partner Ferrer disengaged from Egrifta last year. In a research update to clients today, Loe maintained his HOLD rating and $1.00 target on Theratechnologies.

Theratechnologies is hoping 2013 will be an improvement over a 2012 that was difficult for its investors. Shares of the company fell in half in June when the company Ferrer announced it would withdraw the marketing authorization application with the European Medicines Agency for Egrifta, and have trickled to nearly half of that in the time since.

Loe, who felt the Ferrer news was absolutely terrible, says he remains positive about Egrifta’s medical potential in multiple endocrinology and neurological markets. He points out that Theratechnologies reported positive Phase II data in both a 60-patient obesity trial and a 152-patient cognition trial that wrapped up last year. Still, he says, the story of the company today is one of regulatory risk in Latin American and European markets, and he cannot fully get behind Egrifta’s potential until there is clarity in these matters.

Shares of Theratechnologies on the TSX closed today up 1.1% to $.47.

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