Wednesday, August 31, 2016

Ipsen Needs Its Big Swing In Oncology To Connect

Given that I'm looking for French drugmaker Ipsen's (OTCPK:IPSEY) (IPN.PA) free cash flow to grow at mid-teens rate over the next 10 years, I don't think my estimates are all that conservative, but it still isn't enough to get me too excited about these shares. I do think there is a chance that the marketing partnership with Exelixis (NASDAQ:EXEL) can outperform and I definitely think that the company's opportunity in neuroendocrine tumors in the U.S. has historically been overlooked, but the company has a pretty wretched history of internal R&D and its M&A exploits have been no better.

I believe that it's generally not a good idea to invest in specialty pharma companies that lack strong internal R&D efforts (call it my "Valeant hypothesis" if you like), and I think the market has largely dialed in the value of this business. While I do see avenues for outperformance, I also see execution and competitive risks, as well as the concern that the company will squander future cash flows.

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Ipsen Needs Its Big Swing In Oncology To Connect

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