here is latest from Bell Potter... A very interesting read and would make you think PGL is ready to push back up ove the next few months. Massive upside from these levels with a very limited downside, (unlike Tharlow would have you believe)
Share price chart: PGL CompanyUpdate Date of issue 18.07.07 Lining up all the ducks PGL recently presented to Bell Potter. Following this presentation, we have come to the view that PGL is resolving a number of key commercial issues before progressing towards a more formal commercialisation strategy that would potentially involve a regional licensing or co-development deal. Over the past six months, PGL has delivered excellent Phase 2b clinical trial data and is on track in terms of building up manufacturing capabilities for Phase 3 trials and initial commercial sales. Earlier this year, the company also bought back Medigen’s 15% royalty stream. PGL is yet to lock down the Phase 3 clinical trial design with the US FDA and appoint a contract research organise (CRO). Partnership potential Going it alone was described by PGL management as a “default strategy”. We believe this indicates that PGL may undergo Phase 3 trials with the help of a partner. We reviewed the FDA database of current FDA-approved ongoing clinical trials for liver cancer and concluded that studies with more than 250 patients were conducted by large industry players. In our view, PGL is likely to complete the commercialisation of PI-88 with a larger partner. This could range from companies similar to Bayer Pharmaceuticals (who own liver cancer drug Nexavar) through to lesser known companies but ones who have significant distribution capacity into Asia. Earnings estimates unchanged Our conversations with the company over the last month have focussed on PI-88’s clinical development strategy. At this stage, we are uncertain about how PGL will market and distribute PI-88 worldwide. Our current assumptions are based on PGL marketing the drug without a partner but gaining relatively slow uptake and minimal market share (5-25% over five years in the US and Europe, 5-15% over five years in Asia-Pacific and 0.5%-1.5% over five years in China). We remain confident that PGL will start Phase 3 clinical trials before the end of the year and, as a result, our earnings estimates remain unchanged. We maintain a “Buy 2” but why does the market think otherwise? We reiterate our Buy 2 rating based on our probability-weighted valuation of $14.64. We expect PGL to deliver on a number of milestones over the next 3-6 months. This will place the company in a prime position to negotiate a licensing deal for PI-88 in various geographical regions. We believe the company has intentionally not committed to a particular development strategy given it has previously (2005) been burnt by announcing partnership plans that were never consummated. INVESTMENT DATA Share Price $4.310 Issued Capital Ordinary Shares 59.3m Options 3.0m Fully Diluted 62.3m Market Capitalisation $268.5m 52 Week Low/High $2.51 / $9.45 Valuation $14.64 Top 20 shareholders as at 30 June 2006 own 63% of total shares on issue Year end Jun 06a 07f 08f 09f Revenue $m 1.7 0.9 0.0 0.0 EBITDA $m -8.7 -16.9 -43.9 -38.2 NPAT $m -7.6 -16.8 -39.5 -35.8 EPS (adj) ¢ -18.8 -38.4 -90.7 -82.0 EPS growth % na na na na PER x na na na na Data is normalised and fully diluted. Progen Industries (PGL) Buy 2 Company confidence intact Linda Ong [email protected] $2.20 $3.20 $4.20 $5.20 $6.20 $7.20 $8.20 $9.20 Jul-06 Nov-06 Mar-07 Jul-07 Bell Potter Securities Research Email [email protected] Website www.bellpotter.com.au AFS Licence No. 243480 ABN 25 006 390 772
PGL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
