Sorry for the delay, but I am back with a second company profile posted to the Biotech Due Diliegence wesbite- Adolor-
click here for complete $ADLR company research page
Let's get right to the point. ADLR is dirt cheap. But that doesn't necessarily make it a buy. When ADLR posts full-year 2010 results this Wednesday 2/23/2011, they will have $40-45m in cash and an enterprise value less than $20m. This is certainly a rarity for a company receiving royalties on a marketed drug. Sales of Entereg (alvimopan) have been gradually increasing but slower than forecast- causing the company to withdraw its guidance last summer. The actual cash that ADLR received from GSK for Entereg sales in 2010 will be in the neighborhood of $10m, not nearly enough to cover cash burn.
The data on Entereg continue to be nice, as indicated by the cohort comparative study of 7000 patients that I link to and summarize on the ADLR stock research page. The treatment clearly improves morbidity outcomes, shortens hospital stays, and therefore will save more in healthcare expenses than it costs ($500-1000 per patient). However, sales are anemic and there has been concern about whether GSK will continue to sell the drug.
click here for complete $ADLR company research page
Let's get right to the point. ADLR is dirt cheap. But that doesn't necessarily make it a buy. When ADLR posts full-year 2010 results this Wednesday 2/23/2011, they will have $40-45m in cash and an enterprise value less than $20m. This is certainly a rarity for a company receiving royalties on a marketed drug. Sales of Entereg (alvimopan) have been gradually increasing but slower than forecast- causing the company to withdraw its guidance last summer. The actual cash that ADLR received from GSK for Entereg sales in 2010 will be in the neighborhood of $10m, not nearly enough to cover cash burn.
The data on Entereg continue to be nice, as indicated by the cohort comparative study of 7000 patients that I link to and summarize on the ADLR stock research page. The treatment clearly improves morbidity outcomes, shortens hospital stays, and therefore will save more in healthcare expenses than it costs ($500-1000 per patient). However, sales are anemic and there has been concern about whether GSK will continue to sell the drug.
On to the rest of the pipeline. ADLR was dealt a harsh (but not so shocking) blow when PFE abandoned development of their two jointly developed delta opioid receptor agonist pain candidates ADL5849 and ADL5747 after several disappointing phase 2 trial results. These were the most advanced molecules in the pipeline and the PFE deal was ADLR's only source of external research & development revenue- this will come to an end in March 2011.
The next most advanced program is for opioid-induced constipation or OIC (aka opioid-induced bowel dysfunction, OBD). Two phase 2 trials of ADL5945 are ongoing, but as well have yet to see ANY data (not even phase 1) for these compounds, it is hard to evaluate the prospects until data release forecast for this summer. This program also faces numerous competitors that are in more advanced development.
Finally ADLR has a new phase 1 pain candidate that is repositioned beloxepin (a former candidate for depression)- the first disclosure of any work on this drug was a January 2011 press release. Hopefully we will receive an update on this program this week.
All in all, ADLR is cheap, but I find no real reason to buy in at this point. They burned through a good portion of their cash stockpile on the failed delta pain program, and what they have won't last long as they advance the OIC candidates through phase 2.
The only catalysts I see are some miracle improvement in Entereg sales (unlikely), or impressive phase 2 OIC data this summer that would facilitate a new, lucrative partnership
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