Aeterna Zentaris Shares Are Currently Undervalued And Provide Upside, Says H.C. Wainwright


In a research report released today, H.C. Wainwright analyst Swayampakula Ramakanth initiated coverage on Aeterna Zentaris Inc. (AEZS) with a Buy rating and a $3 price target, which represents a potential upside of 152% from where the stock is currently trading.

The following bullets contain some highlights from that call:

  • While the current US AGHD detection market, is only about $18 million, the relative ease with which Macrilen can be used compared to the gold standard, could potentially yield a higher penetration as well as expand the market. Management also expects to promote Macrilen for traumatic brain injury patients which is a nascent market. Including both indications, we expect Macrilen to generate a risk-adjusted peak sales of $69 million by 2025. Additionally, though Macrilen is being evaluated for cancer cachexia we are not accounting for any revenues at this time.
  • Management plans to acquire/in-license approved product(s) by the end of 2014 to make their commercial structure more viable, We believe management could be looking for product(s) that can yield an annual free cash flow of $10-$12 million. If successful, this would provide an upside to our current valuation by nearly $1.40 per share as we have not accounted for these revenues in our current model.
  • Zoptarelin doxorubicin is currently in a registration study for treatment of advanced or metastatic endometrial cancer. If successful, it could be launched in 2018 and we estimate a risk-adjusted peak sales of $55 million. The drug is also being tested in a Phase 1/2 study for treatment of prostate cancer which could provide upside, if successful.
  • Considering management’s commitment to maximize operational efficiency and the potential to become operationally positive by 2018, if not earlier, we believe the Aeterna Zentaris shares are currently undervalued and provide upside to a long-term investor.

According to TipRanks, which measures analysts and bloggers success rate based on how their calls perform, analyst Swayampakula Ramakanth currently has a one-year average return of 10.8% and a 50% success rate. He is ranked #2292 out of 3215 analysts.

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