Hidden Value With QLT

QLT (Nasdaq: QLTI ) achieved what is still a pretty rare feat in the drug industry: attaining profitability through the performance of a drug. Visudyne is marketed by QLT's partner Novartis (NYSE: NVS ) for the treatment of age-related macular degeneration (AMD). AMD is the most common cause of vision loss in people older than 50.

In 2003, Visudyne had $357 million in sales, of which $142 million was reported by QLT. Guidance for 2004 is $430 million to $455 million of Visudyne sales, and QLT expects to receive 30.3% of that amount plus reimbursement for certain costs.

Visudyne is an important drug for QLT as it is currently the company's only approved product. With competitors on the horizon looking to take market share, QLT's share price has come under pressure and is down 50% from its high of the past year.

The biggest near-term threat is Macugen from Eyetech (Nasdaq: EYET ) and Pfizer (NYSE: PFE ) . Macugen just went before the FDA's Dermatologic and Ophthalmic Drugs Advisory Committee. While the committee did not take a vote, Macugen does have priority-review status, and I would venture a guess that it will be approved.

Over the next six months, biotech investors should keep an eye on QLT. If the share price continues to get pounded on concerns over Visudyne losing market share, the opportunity may present itself to pick up a good value. With the pending acquisition of Atrix Laboratories (Nasdaq: ATRX ) , QLT is bringing in some solid drug programs that could slip in under the radar as the market is distracted by the unfolding AMD situation.

Of particular interest is the six-month formulation of Eligard for the treatment of prostate cancer. If approved, as I expect, in the coming months, this will be the first testosterone-lowering drug of this duration on the market. With first-mover status, I think the sales could be substantial.

To learn more about the biotech industry, check out Charly's articles:

Fool contributor Charly Travers doesn't own shares of any company mentioned in this article.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.