Sunday, June 19, 2011

Why I'm Upgrading Adolor to a Buy

Smith On Stocks submits:

Investment Thesis

Adolor has gained back Glaxo?s (GSK) rights to Entereg (alvimopan) in a transaction that I regard as a highly positive, company changing event. Entereg has the critical sales mass to enable Adolor to be a self-sufficient, cash flow positive company. I believe that the Entereg sales run rate entering 2012 could be on the order of $40 million, $50 million entering 2013, and over the next several years could grow to $100 million.

The terms of the deal were amazingly favorable to Adolor, and the company has much for which to thank Glaxo. On its own, Adolor could not have brought Entereg to this sales level and might not have been able to launch it in the first place. The difficulties of introducing a first-in-class drug to an increasingly cost-conscious hospital marketplace has made the launch and sales ramp of a new product much more difficult, and it

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