Investors want M&A from Knight Therapeutics, says Laurentian

Laurentian Bank Securities analyst Joseph Walewicz says investors have high expectations for the cash on Knight Therapeutics’ (TSX:GUD) balance sheet.

This morning, Knight Therapeutics announced that its new drug submission for Iluvien, intended to treat diabetic macular edema in patients who have been previously treated with a course of corticosteroids and did not have a clinically significant rise in intraocular pressure, has been accepted for review by Health Canada

“Iluvien is a unique and innovative product that is available in different markets around the world, including the United States and Europe,” said CEO Jonathan Ross Goodman. “We are happy to continue advancing Iluvien and our portfolio of novel therapeutics that improve the health of Canadian patients.”

Walewicz says this news was expected, but he has not yet worked the treatment into his financial model for Knight.

“If approved, Iluvien could launch in Canada in 2018. Given the long delay in filing with Health Canada (vs. U.S. and international approvals), and modest sales to date, we have not yet added Iluvien to our GUD forecast,” he says. “However, with a growing portfolio of ophthalmology products for Canada, including Azasite (approved), Iluvien (now submitted and under review) and NETILDEX (submission to Health Canada expected in H2/17), ophthalmology could be a key growth driver for GUD in 2018+.”

In a research update to clients today, Walewicz maintained his “hold” rating and one-year price target of $8.75 on Knight Therapeutics.

“We continue to believe that the current stock valuation reflects high expectations for M&A from investors,” the analyst says.