Analysts Positive On Insys Ahead Of 2019 Pipeline Catalysts

Insys Therapeutics Inc INSY, which specializes in painkillers and synthetic cannabinoid drugs, reported Thursday after the close with a sharp decline in revenue and a wider-than-expected loss in the fourth quarter.

The Analysts

Janney analyst Yun Zhong reiterated a Buy rating on Insys with an $11 fair value estimate.

RBC Capital Markets analyst Randall Stanicky maintained an Outperform rating and lowered the price target from $9 to $7.

Janney: We Would Take Advantage Of Any Weakness 

The negative after-market reaction to Insys' financial results is attributable to investor concerns over declining opioid product net revenues, significant legal fees and a lack of clarity on the scale of liability associated with the former management, Zhong said in a Friday note.

Yet the strong year-to-date gain in the stock signals that investors are increasingly recognizing the strong potential of the company's pipeline, the analyst said. 

Insys is on track to file two NDAs for naloxone and epinephrine this year and report top-line data from multiple CBD programs, Zhong said. 

"We expect near-term volatility to continue but we would take advantage of any weakness to be buyers."

RBC: Focus Shifts To Pipeline

Amid the ongoing strategic review, the focus has shifted to Insys' pipeline, Stanicky said in a Thursday note.

Both the Subsys and Syndros products remain challenged, with Subsys sales expected to dip by 28 percent in 2019 as the transmucosal immediate-release fentanyl market shrinks, the analyst said.  

In the absence of an inhalation version and/or expanded indications, Syndros is unlikely to grow meaningfully, the analyst said. 

RBC modestly increased its estimate for the expected contribution from the pipeline, but still feels the company needs to take on some challenges before realizing its full value, Stanicky said. 

RBC expects the company to raise capital midyear to help it achieve profitability, while it sees some P&L support from cost-cutting initiatives in 2019.

The Price Action

Insys shares were down 8.01 percent at $5.22 at the time of publication Friday. 

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