) to buy from neutral. On Monday, QLT agreed to acquire Atrix Laboratories (ATRX
Analyst Dimi Ntantoulis attributes yesterday's stock drop to the price paid for Atrix Laboratories (27% premium to its June 9 close) for its two lead products, Eligard for prostate cancer and Atrisone for acne, both which are already partnered and unlikely to be blockbusters, as well as dilution to EPS and reduction in cash.
With risks inherent in the purchase, he believes QLT should trade at a multiple discount to specialty pharma (19 times 2005 consensus EPS) and biotech (25-30 times), but thinks the market does not give QLT any value for the acquired assets of Atrix. He sets a $21.50 price target on the stock.