Market Overview

Celator Pharma Investors Applaud Needham's New Buy Rating, $24 Target


Shares of Celator Pharmaceuticals Inc (NASDAQ: CPXX) are nearing their 52-week high after Needham started coverage of the stock with a Buy rating and $24 price target, saying the company's Vyxeos could become new standard of care for high risk acute myeloid leukemia.

Acute myeloid leukemia (AML) is a type of cancer of the blood and bone marrow affecting immature blood cell growth.

"We estimate initial market for Vyxeos is about $750 million in the U.S. and Europe, but believe the drug could ultimately replace 7+3 for many high risk AML patients," analyst Chad Messer wrote in a note.

The stock traded recently at $13.37, up 7.8 percent.

"In a Phase III study in elderly secondary AML patients Vyxeos improved overall survival by 3.6 months. Response rates were also higher on Vyxeos and more patients were able to receive a subsequent bone marrow transplant. Ease of use is also better with Vyxeos. 7+3 requires a continuous week long infusion of cytarabine, while Vyxeos is injected no more than 3X/week," Messer noted.

Messer expects the initial U.S. opportunity at more than $200 million based on an expected third quarter 2016 filing, and expects an approval in mid-2017.

He continued, "Even though the pivotal trial only enrolled elderly patients with secondary AML, we see no reason why Vyxeos won't eventually be used in most high risk AML patients that currently receive 7+3."

"Pending further trials to expand its label, we believe the U.S. Vyxeos opportunity is >$500MM domestically by 2025. There is additional upside to CPXX shares from an ex-U.S. partnership," the analyst noted.

"An MAA filing is expected in 1Q:17. We forecast $185MM in European sales by 2025," Messer added.

Commenting on the cash position, the analyst noted "Celator ended 2015 with $23.3 million in cash and has subsequently raised over $50 million in secondary and at-the-money offerings and believes current cash resources should last through 2017, past Vyxeos launch."

TipRanks ranks Messer 3,685 out of 3,857 analysts. The analyst has a success rate of 31 percent and average return per recommendation of -10.8 percent.

Latest Ratings for CPXX

Jun 2016DowngradesBuyHold
May 2016DowngradesBuyNeutral
Apr 2016Initiates Coverage onBuy

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Posted-In: Chad Messer NeedhamAnalyst Color Price Target Initiation Analyst Ratings


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