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Take a pass on Theratechnologies, Mackie Research says


A weaker than expected quarter gives Mackie Research’s André Uddin no reason to revise his prevailing thoughts about Theratechnologies (Theratechnologies Stock Quote, Chart TSX:TH), which keeps its “Hold” rating from Uddin with a slight reduction in target price from C$9.65 to C$9.25.

Yesterday, Montreal-based specialty pharma company Theratechnologies released its first quarter ended February 28, 2019, financials, coming in with record net sales of $15.1 million, up 86 per cent year-over-year, with sales of both Egrifta and Trogarzo up 11 and 44 per cent, respectively. (All figures are in US dollars unless noted otherwise.)

President and CEO Luc Tanguay called it “an excellent start to 2019.”

“We are more active than ever in the United States to support our two products. We are also preparing for the potential launch of Trogarzo in Europe which may represent a sizeable future source of revenues,” he said in a press release. “Our company is on very solid footings. The acquisition of a targeted oncology platform announced during our first quarter, the strong NAFLD/NASH data with tesamorelin, the recently approved F4 formulation and other product development initiatives for Egrifta and Trogarzo give us several opportunities to bring Theratechnologies to unprecedented levels.”

In a client update on Thursday, Uddin says the $15.1 million top line missed his estimate of $21.7 million by a wide mark, while the net income loss of $1.2 million or negative $0.02 per share was also lower than his estimate of $1.4 million or $0.02 per share. Adjusted EBITDA of $1.5 million compared to Uddin’s estimate of $4.1 million.

The analyst adds that although TH’s sales for Egrifta, the company’s injectable drug used to reduce abdominal fat in patients with HIV and lipodystrophy, were largely in line with his estimates for Q1 ($9.0 million versus Uddin’s $8.4 million), sales are likely to be flat for 2019.

“Egrifta Rx in the US has flatlined – we expect the annual sales in 2019 to be in-line with those in 2018. TH is to launch a more user-friendly F4 formulation of Egrifta in Q4 2019. On Monday TH announced promising results of a small, investigator-sponored trial to test Egrifta for treating NAFLD-NASH in HIV patients. Based on the results, TH is evaluating three potential options: (i) to amend Egrifta’s label to include benefit in reducing liver fat in HIV patients, (ii) to re-file a marketing application in Europe, and (iii) to develop Egrifta as a potential treatment for NAFLD-NASH (outside of HIV patients). More studies are likely needed,” Uddin writes.

The analyst is also lowering his US sales estimates for Trogarzo, although he remains confident that the drug will get approval in Europe and launch mid-2019.

For 2019, Uddin is expecting revenue and fully diluted EPS of $88.4 million and $0.01 per share, which he thinks will improve to $141.1 million and $0.25 per share by 2020. His C$9.25 target represents a projected return of six per cent at the time of publication.


About The Author /

Jayson MacLean
Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.


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