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Eton Pharmaceuticals (NASDAQ: NASDAQ:ETON) saw its price target increased by H.C. Wainwright from $9.00 to $11.00, while the firm maintained a Buy rating on the stock.
The adjustment follows Eton's recent announcement on Thursday that it will acquire Increlex, a treatment for growth failure in children with severe primary IGF-1 deficiency (SPIGFD), from Ipsen (IPN; not rated) under an all-cash asset purchase agreement.
The deal, valued at $22.5 million at closing with an additional $7.5 million for product inventory, will be financed by Eton through an amendment to its existing credit agreement, now totaling $30 million with a maturity period of three years. This acquisition aligns with Eton's strategic goal to expand its commercial portfolio to 10 products by 2025.
The analyst from H.C. Wainwright believes this acquisition marks a significant step towards achieving the company's expansion objectives.
The acquisition's financial terms and expected Increlex revenues starting from the first quarter of 2025 were factored into the revised financial model, along with adjustments to operational expenses. These changes underpin the raised 12-month price target for Eton Pharmaceuticals.
Increlex has received approval from both the FDA and the EMEA, and is also approved in the European Union. Eton's management estimates that there are approximately 200 patients in the U.S. and between 900 to 1,000 patients in the EU who could benefit from this therapy.
In other recent news, Eton Pharmaceuticals is making significant strides in expanding its portfolio and revenue growth. The company recently announced the acquisition of the rare disease drug Increlex from Ipsen S.A.
The move is set to bolster Eton's pediatric endocrinology portfolio and support its mission to provide life-changing medicines for patients with ultra-rare conditions. The acquisition is expected to conclude by the end of 2024, backed by Eton's available cash and an expansion of its credit facility with SWK Holdings.
In the financial realm, Eton reported a 40% year-over-year rise in product sales in the second quarter of 2024, reaching $9.1 million. This surge was primarily driven by ALKINDI SPRINKLE and Carglumic Acid. However, the company also reported a net loss of $2.9 million for the same quarter due to increased R&D and general expenses.
Eton's strategic acquisition of PKU GOLIKE aims to capture a share of the estimated $100 million PKU medical foods market in the US. In addition, the company's pipeline candidate, ET-400, is expected to launch in 2025, pending FDA approval.
InvestingPro Insights
Eton Pharmaceuticals' recent acquisition of Increlex and the subsequent price target increase by H.C. Wainwright are reflected in the company's current market performance. According to InvestingPro data, Eton's market capitalization stands at $178.53 million, with the stock trading near its 52-week high. This aligns with the positive outlook expressed in the article.
InvestingPro Tips highlight that Eton has seen significant returns over various time frames, including a 19.14% return in the last week and a 71.04% return over the past year. These strong performances support the analyst's bullish stance on the stock.
However, it's important to note that Eton is not currently profitable, with a negative P/E ratio of -26.7 for the last twelve months as of Q2 2024. This aligns with the InvestingPro Tip indicating that analysts do not anticipate the company to be profitable this year. The acquisition of Increlex may be seen as a strategic move to improve the company's financial position and growth prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Eton Pharmaceuticals, providing a deeper understanding of the company's financial health and market position.
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