Tuesday, July 18, 2006

Calls of Note Part 4

- Oppenheimer & Co notes that on or before the PDUFA date of July 24, they expect the FDA to approve Encysive (NASDAQ:ENCY)'s Thelin for the treatment of pulmonary arterial hypertension (PAH). Recalls that the FDA issued an Approvable Letter to Encysive's original application in March. Subsequently, Encysive submitted a complete response in May, which the agency accepted and designated as a Class 1 resubmission (thus triggering a 2-month review from the May 25 filing date).

Firm notes they have always been confident in Thelin's approvability based on the statistically significant benefit demonstrated by the drug in a large Phase III trial (STRIDE-2) operated under an SPA, as well as the established utility of this drug class (endothelin antagonists) against PAH. Moreover, firm's confidence is enhanced by the recent positive recommendation for approval in the EU on June 2 and the FDA's acceptance of Encysive's response as a two-month Class 1 resubmission on June 15 (as opposed to a six-month Class 2 or an outright non-acceptance).

Despite firm's real-options valuation analysis being heavily skewed toward conservative commercial scenarios, they still believe there is significant value in shares of ENCY. Reits Buy and $9 tgt.

Notablecalls: Not actionable but good to know category. I must say I did like how GTOP reacted following positive call from RBC yesterday.

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