Thirty percent. That is how far shares of my Motley Fool Hidden Gems recommendation QLT
There are some important issues that need to be addressed during this week's call, during which management will discuss Q1 earnings. First off, last week QLT partner Novartis
The big question with Visudyne is whether or not sales growth in Europe and Japan will be sufficient to offset losses to Macugen for market share in the U.S.? If it is, then I think QLT will be okay, as long as Visudyne sales can remain at current levels. I do not expect Visudyne sales to completely crater. All of the companies involved are looking at combination therapy. If the combination of the two drugs proves more effective than either drug alone, Visudyne will continue to play an important role in this market.
Another pressing issue is how well the launch of the six-month formulation of Eligard has been going. This prostate cancer treatment was only on the market for six weeks during Q1, so it is very early in the sales ramp. Eligard needs to be the company's growth driver, and the status of this product is important, since the shorter durations have been facing declining reimbursement rates, a fact that has led to declining sales. Uptake of this product is crucial for reversing that trend and delivering the top-line growth that QLT was looking for when it purchased Atrix Laboratories and its Eligard franchise last year.
Despite issues with the company's two most important products, all is not bleak at QLT. The company will know in July if the FDA will approve its drug Aczone for the treatment of acne. While this drug will not be a huge seller, it could attain revenues of a level that would be meaningful for a company of this size.
Right now QLT is sitting on nearly $400 million in cash. It is not helping shareholders at all to have that much cash sitting there idly. Especially in light of the stock's performance this year. During this conference call, I'd really like to hear some comments regarding how this cash will be deployed to increase the value of the company. A significant stock buyback would be more than acceptable -- as would the purchase of late-stage drug programs.
After the conference call Thursday morning, I'll be back to talk about how it went.
For additional articles on the biotech industry see:
- A Biotech Value Play
- Has Elan Been KO'd?
- Pfizer Pfaces Its Pfuture
- The Best Company I've Never Owned
- Better Times at BiogenIDEC
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