Aegis Positive on Auxilium (AUXL) Merger; Affirms at 'Buy'

Aegis Capital maintains its Buy rating and $37 target price on Auxilium Pharma (Nasdaq: AUXL) following news that the company will merge with QLT, Inc. (Nasdaq: QLTI).

Analyst Ram Selvaraju commented, Firstly, the transaction positions Auxilium in the rapidly-growing and highly attractive ophthalmology space, in addition to the men's health and collagen deposition disorders markets. Second, the transaction is expected to allow Auxilium to reduce its long-term effective tax rate from the high 30% range to roughly 25%, and potentially lower in later years. Third, QLT brings Auxilium $140mm in net cash.

About QLT's platform: QLT Inc. has a single candidate, QLT091001, aimed at ophthalmic indications, including Leber congenital amaurosis (LCA) and retinitis pigmentosa (RP), an orphan eye disease, which is entering mid-stage proof-of-concept clinical studies. Auxilium intends to pursue out-licensing discussions here. QLT may also receive royalties from Valeant Pharmaceuticals International (NYSE: VRX)(Buy) on future sales of Visudyne in new indications beyond wet age-related macular degeneration (AMD) and possesses technology platforms in drug delivery (Atrigel) and photodynamic therapy (PDT).

For an analyst ratings summary and ratings history on Auxilium Pharmaceuticals click here. For more ratings news on Auxilium Pharmaceuticals click here.

Auxilium Pharmaceuticals closed at $21.23 yesterday.

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