We are maintaining our Neutral recommendation on
Optimer Pharmaceuticals
(
OPTR
) with a target price of $14.00.
In March 2012, Optimer Pharma reported decent fourth quarter and
full year 2011 results. The company earned 38 cents per share on an
adjusted basis which compared favorably to the year ago loss of 31
cents and the Zacks Consensus Estimate of break-even earnings.
Higher revenues led to the improvement. Revenues in the final
quarter of 2011 included $11 million of net sales of Optimer
Pharma's first marketed product Dificid (up 3.7% sequentially).
(Please refer to
Revenues Rise at Optimer Pharma
for our detailed discussion on the earnings report).
We remind investors that Dificid, an antibiotic, was approved in
the US in May 2011 for treating patients suffering from clostridium
difficile-associated diarrhea (CDAD). CDAD refers to the most
common form of nosocomial, or hospital acquired, diarrhea. In
December 2011, the drug was approved in the EU for CDAD under the
trade name Dificlir. Dificlir will be launched in the EU by partner
Astellas Pharma shortly. The drug is currently under priority
review in Canada. Approval in additional territories will improve
the sales potential of the drug.
Moreover, Optimer Pharma has an exclusive two-year agreement
(through July 2013) with
Cubist Pharmaceuticals
(
CBST
) to co-promote Dificid in the US for the treatment of CDAD. We
believe the deal is a positive for Optimer as it will benefit from
Cubist Pharma's experience in marketing hospital-based antibiotics.
Optimer Pharma is looking to expand Dificid's label into other
indications.
However, we remain concerned about Optimer Pharma's over
dependence on Dificid for growth. In the absence of a decent
pipeline, Optimer has little to fall back on if Dificid performs
below expectations.
We see limited upside potential from current levels and hence
retain our Neutral stance on the stock.
CUBIST PHARM (
CBST
): Free Stock Analysis Report
OPTIMER PHARMAC (
OPTR
): Free Stock Analysis Report
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