Oral Testosterone Pill Could Make Lipocine Worth Substantially More

Health and Healthcare

Published: June 23, 2015 11:35 am

Lipocine Inc. (NASDAQ: LPCN) may have a huge hit on its hands with the first swallowable oral testosterone treatment. This could revolutionize the testosterone market because users generally have to inject themselves or use a gel that absorbs through their skin.

Canaccord Genuity sees big upside here. The firm’s Corey Davis and Lidia Liu initiated coverage of Lipocine with a Buy rating and assigned it a $15.00 price target. If the firm is correct in its assessment, then Lipocine shares could rise more than 80% if the outcome expectations live up the scenario outlined in this analyst call.

The way the firm came up with the target price of $15.00 was a discounted price-to-earnings (P/E) valuation, applying a multiple of 20 to the 2021 earnings per share target $2.06, and then discounted by 20% for five and a half years. Risks to this assessment include failure to gain FDA approval, to find a partner or to sell the company.

Canaccord Genuity’s analyst Corey Davis said:

Lipocine is on the verge of being the first company to have an FDA-approved oral pill of testosterone for male hypogonadism. Currently, testosterone replacement therapies (TRT) exist as gels, patches, injectables, and in buccal and intranasal forms. While gels are the most popular approach, they carry the risk of transference to women and children; hence a Black Box warning on the labels. Prior attempts to develop an oral have all failed because testosterone has inherently low bioavailability and first-pass metabolism can lead to liver toxicity.

There are four outlined reasons that the analyst call shows why Lipocine’s LPCN 1021 has overcome these barriers:

It met FDA-guided Phase 3 endpoints.
It has convenient twice-daily oral pill dosing.
Its safety profile is very clean.
And it has minimal food effects.

ALSO READ: 5 Analyst Stocks Called to Rise 50% to 100%

Lipocine shares were up about 5.5% at $8.50 in late morning trading on Tuesday. Its 52-week range is $3.70 to $11.33, but the market cap is a mere $143 million.

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