|Labopharm: More than meets the eye|
|By Nicholas DeCesare|
|Thursday, 15 April 2010 03:00|
Labopharm is a specialty pharma company with headquarters in
In the days that followed the approval of Oleptro, the market seemed disappointed that Labopharm did not have a partner lined up and ready to market the drug. However, the decision came days early from the agency, and even caught Labopharm by surprise. However, the company has continually said they are currently in talks to finalize a partnership within days. CEO James Howard-Tripp plans an aggressive Oleptro launch by Q3 in an $11 billion dollar anti-depressant market in the
Labopharm’s other major product is their once daily Tramadol, for the treatment of moderate to sever pain, which has already been on the United States market and world markets and is showing significant growth. In 2009, sales of Tramadol grew 27% compared to 2008, and more double digit growth is expected this year. The company has also begun the regulatory process in
As I examined the potential market for Oleptro and current market for Tramadol, it became even more obvious just how undervalued this company is. Assuming the market for Oleptro is anywhere from $500 million to $1 billion, which is 5 to 10% of the overall anti-depressant total (which keeps growing each year) and that a partnership would generate about 20-30% of revenues from the product for Labopharm, this could mean an approximate annual revenue for DDSS of over $200 million a year for Oleptro only. Revenue from the once daily Tramadol product were approximately $5 million per quarter last year. While the company believes that revenues will continue to be higher with this product, let’s be conservative and assume only $20 million per year added to the Oleptro revenue stream which should begin flowing in by the end of Q3. With a current market cap of just over $100 million and a stock price of under $1.50, I see Labopharm as being very undervalued and conservatively worth $2.75 a share based on possible revenue from Oleptro and current revenue from Tramadol. I invite you to do your own research on Labopharm.
Disclosure: long DDSS