Maxim Group Starts SciClone Pharmaceuticals (SCLN) at Buy
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Maxim Group initiates coverage on SciClone Pharmaceuticals (NASDAQ: SCLN) with a Buy rating and a price target of $14.00.
Analyst Gabrielle Zhou highlighted:
- SciClone is a US-based specialty pharma company with its operating focus on the China pharmaceuticals market. The company has both commercial products and in-licensed therapeutic candidates (for exclusive rights in China) in clinical development with a proven track record.
- The company's lead commercial product is ZADAXIN (synthetic thymosin alpha 1), a stimulator of the immune system that enhances attack, has shown some utility against a range of viral infections such as HBV and utility in certain cancers. ZADAXIN generated $146M in revenue in 2015, primarily from sales in China. With more than 100M people infected with HBV in China, with rising concerns over viral outbreaks (SARS), and rising rates of cancer, the opportunity for an immune stimulant is significant.
- Beyond Zadaxin is DC Bead (liver cancer): SciClone launched DC Bead for liver cancer (HCC) in 2H15, after working closely with the CFDA for years. DC Bead revenues initially should be modest, but given the high prevalence of HCC in China we believe revenues will grow driven by awareness and the unmet medical need.
- The company's strategy is to continue in-licensing innovative therapies into China. SciClone today is currently promoting multiple products from Baxter and Pfizer and has nine in-licensed drug candidates in clinical development.
- Could SciClone be Acquired? We are aware of an unsolicited bid, but only at a modest premium to the current stock price. Given what we see as a robust outlook, we feel it is unlikely the company would be acquired for less than our suggested target valuation.
- Conclusion. SciClone is uniquely positioned as a significant specialty pharma player in the China market. The company is among the forerunners of expatriate companies to in-license innovative ex-China therapies towards commercialization in China. ZADAXIN is a proven success. Solid top-line revenues (from ZADAXIN) and a balance sheet with $130M in cash allow SciClone to "replicate" the Zadaxin success with other products while minimizing investor risk
Shares of SciClone Pharmaceuticals closed at $10.20 yesterday.
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