Palatin Technologies, Inc. (NYSEMKT:PTN) and Fosun Pharma have entered into an agreement to develop and commercialize the drug Rekynda, which treats female sexual dysfunction. According to the terms of the deal, Fosun, a leading Chinese healthcare firm that reels in $2 billion in sales annually will absorb all related costs and take responsibility for the developmental and commercial facets of the product. PTN will be paid $5 million upfront with an additional $7.5 million milestone payment in the event of the drugs regulatory approval in China.
Analyst John Newman of Canaccord expects “PTN to file an NDA for Rekynda in 1Q18 for hypoactive sexual desire disorder (HSDD), and anticipate approval in 1Q19. PTN intends to enter the EU market through partnerships, which we view as an appropriate approach to market entry given the firm’s resources and intention to focus on early pipeline development. We believe that an approval in the US market should help bolster approval prospect in China.”
Pointing out that potential sale milestones could add up to $92.5 million along with royalties from net sales reaching into the high single or low-double digits, the analyst underscores the need for the company to further examine the Chinese market, noting: “The partnership agreement as in line with PTN’s general go-to-market strategy for ex-US markets. We believe further due diligence is needed to assess the approval prospect and market potential in China.”
As such, the analyst maintains a Buy rating on PTN with a price target of $6.00 representing a 1,035% rise over current trading levels. (To watch Newman’s track record, click here)