Guggenheim Remains Positive on Aralez Pharma (ARLZ) Amid Toprol-XL Deal with AstraZeneca (AZN)
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Guggenheim affirms Aralez Pharmaceuticals Inc. (Nasdaq: ARLZ) with a Buy rating and $12 price target after the company announced it will acquire the U.S. rights to Toprol-XL (metoprolol succinate) and its Authorized Generic (AG) pursuant to an agreement entered into between AstraZeneca and Aralez Pharmaceuticals Trading DAC, a subsidiary of Aralez.
The firm commented today,
With this deal, ARLZ should be profitable on an adjusted EBITDA basis in 2017 and we had not expected profitability until 2020. Toprol-XL is an extended release beta-blocker (indicated for high blood pressure). With the recently approved Yosprala, as well as the acquisition of Zontivity, ARLZ now has a significant offering of product that we expect to drive revenue in 2017+, and a strong base to continue the company's business development. Toprol-XL and its AG recorded a combined $89MM in 2015, and $53MM year to date through 6/30/2016. ARLZ expects the transaction to be immediately accretive in 2017 on an adjusted basis.
Guggenheim also noted upcoming catalysts for Aralez: 1) Yosprala 100/40mg dose EU MAA filing in 4Q16; 2) Treximet/MT400 Canada filing by end of '16; 3) Build-out of 110-person cardiovascular sales force ahead of Yosprala launch in October '16; 4) Close Toprol-XL acquisition, 4Q16; and 5) M&A and business development '16+.
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