Optimal Opportunities

Chris Schott, CFA
JPMorgan
212-622-5676
[email protected]

While Actavis (ACT) narrowed its 2013 guidance expectations in the wake of an unexpected Concerta approval, the company is still poised to post close to 30% EPS growth and potentially double-digit annual EPS growth through 2016. Additionally, the company’s more diversified portfolio should allow one-time, one-product events like competition on Concerta or Adderall XR, among other events, to not have an adverse effect on Actavis’ overall growth profile. As such, we believe Actavis has one of the best growth profiles in the industry and reiterate our Overweight rating on ACT shares. 

While we are modestly reducing our 2013 Actavis EPS estimates to reflect higher spending levels, we see a number of potential upside drivers to results that are not reflected in our current estimates. These include higher than expected Concerta sales (if another competitor is delayed to the market), Pulmicort upside … and incremental product launches beyond Pulmicort. In addition, we continue to believe Actavis’ $100-million synergy target for 2013 is beatable.

Charles C. Duncan, Ph.D.
Piper Jaffray & Co.
212-284-5025
[email protected]

We are initiating coverage on Inovio Pharmaceuticals (INO) with an Overweight rating and 12-month price target of $1. Inovio is developing a novel DNA-based vaccine platform, utilizing proprietary electroporation technology to create robust immune responses. 

Inovio’s vaccines have demonstrated provocative immune responses in early studies against multiple non-viral oncology targets (prostate, leukemia, breast, lung), as well as several infectious diseases HIV, HCV, HPV, and the flu. 

Our near-term valuation considers only the U.S. opportunity we view in VGX-3100, Inovio’s lead candidate for treating cervical dysplasia (HPV). 

We recommend risk-tolerant investors to initiate or add to positions in INO shares in anticipation of positive Phase II data in HPV, as well as what we expect to be further clarity from Phase II data for HCV and leukemia, both by YE13, with interim HCV data possible this quarter. These additional data points should serve to validate the breadth of the platform.

Edward Nash
Cowen and Co. 
646-562-1385
[email protected]

Inovio (INO) reported 3Q12 financial results on Nov. 7. The company reported a loss per share of $0.05 as compared to our estimate of a loss per share of $0.03. Inovio ended 3Q12 with approximately $15.2 million in cash, cash equivalents and short-term investments, which we believe will take them through 3Q13. Inovio’s $23 million National Institute of Allergy and Infectious Disease contract is a testament of its platform technology.