Optimer Pharmaceuticals Inc. (OPTR) is a biopharmaceutical company specializing in anti-infective drug development and commercialization. The company has two phase III drug candidates: Difimicin for Clostridium difficile-associated diarrhea (CDAD), and Prulifloxacin for infectious diarrhea.
Although we are optimistic about the prospect of both candidates in terms of FDA approval and subsequent commercialization, we remain concerned about the competition both candidates will face in the antibiotic market, if approved. We expect the stock to trade sideways until we see phase III data for either of the two candidates. Therefore, we maintain our Hold rating on Optimer with a price target of $8.
Optimer is a company with limited sources of revenue, and is largely dependent on the success of its lead product candidate Difimicin and, to a lesser degree, Prulifloxacin. Although we are optimistic about the prospect of both Difimicin and Prulifloxacin in terms of its clinical trial results and FDA approval, we are very concerned about the competition in the CDAD and infectious diarrhea market. Both drug candidates face intense competition from both big pharmaceutical companies such as Pfizer (PFE) and Bayer AG and smaller biotech companies like Viropharma Incorporated (VPHM) and Salix Pharma (SLXP). In addition to competition from branded products, Difimicin and Prulifloxacin also face competition from generic antibiotics.
We arrive at our price target by using a P/S ratio of 7.4x, multiplied by our estimated 2010 revenue of $67.7 million, discounted at 25% for two years. Risks associated with our price target include any possible delay of Difimicin or Prulifloxacin by the FDA. Upside to our price target may come from the positive phase III trial results for Difimicin and Prulifloxacin.
Varun Parwal contributed to this report.
Read the full analyst report on OPTR.
Read the full analyst report on PFE.
Read the full analyst report on VPHM.
Read the full analyst report on SLXP.
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