La Jolla’s (LJPC) shares lost almost half of their value Monday, after the company pre-announced fourth quarter revenues for its drug Giapreza – and the results were abysmal. Revenue for the blood pressure medication came in at $4.2 million, which is quite lower than consensus expectations of $7.1 million. Giapreza exited 2018 with $16 million in revenue for the year and 2019 guidance is expected to be $24 million, which shows a modest growth.
Cowen analyst Phil Nadeau found the results even more disappointing, as he had guided for $9.1 million for the fourth quarter and an expected $85 million for 2019. In response, Nadeau respectively cuts his estimates for 2019 – 2023 from $85 million to $26 million, $250 million to $75 million and $450 to $150 million and so on throughout 2023. That in mind, the analyst maintains an Outperform rating, but lowers the price target from $50 to $30. (To watch Nadeau’s track record, click here)
“Giapreza’s Q4 revenues suggest that the drug’s launch has been sluggish, and La Jolla’s 2019 guidance implies that uptake will continue to track below expectations for the next several quarters. With Giapreza a hospital product, logistical barriers were expected to slow its adoption. Management has said that the first 12 months of launch (through March 2019) would be a period of “ground work” as hospitals put Giapreza on their formularies and complete all of the internal processes necessary before physicians can adopt it. Furthermore, even after Giapreza is on a formulary management suggests it can take an additional 3-6 months for the hospital systems to be put in place before it can be prescribed. Nonetheless, this morning’s guidance implies that there will not be a meaningful inflection in 2019, meaning that sales will not ramp in earnest until at least two years after Giapreza’s December 2017 FDA approval. […] Nonetheless, our consultants think there is a need for new vasopressors in CRH, and therefore we remain hopeful that Giapreza can ramp to become a meaningful product over time,” Nadeau explains.
Looking ahead, LJPC is expected to have a decision regarding its MAA status from the European Medicines Agency (EMA) in June of 2019 and also intends to partner for EU commercialization ahead of the drug’s launch in Europe.
Analysts are mostly bullish about the stock, according to TipRanks. Out of 5 analysts, 4 are bullish with just 1 sidelined. The consensus price target of $50, shows a potential upside of nearly 854%. (See LJPC’s price targets and analyst ratings on TipRanks)