Sciele Pharma's Positive Outlook

Sciele Pharma, Inc. (SCRX) is a specialty pharmaceutical company engaged in the sale of prescription products for the treatment of cardiovascular, metabolic, obstetrical and gynecological, and pediatric and gastroenterological conditions and disorders. The company’s broad focus and deep product pipeline offer substantial growth opportunities over the next several years.

Moreover, Sciele received a boost in January when the FDA approved the company’s new Sular formulation. This removed a significant overhang from the stock. Sciele is set to launch the new Sular in mid-March when users will be switched to the new formulation prior to the potential entry of generic Sular in June 2008.

Based on our long-term earnings model, we believe the company can deliver 17% top-line and approximately 21% bottom-line CAGR through 2010. The stock trades at a P/E of only 7.8x our 2010 EPS estimate of $2.83. That could make Sciele a very attractive long-term investment.

We are also pleased to see that Sciele has been working on expanding its pipeline in order to drive growth. The company entered into several in-licensing agreements during 2007 and has a very interesting late-stage pipeline. The acquisition of Alliant Pharmaceuticals, the marketing agreement with Addrenex Pharmaceuticals and the acquisition of Aquelle from Summers Laboratories demonstrate that Sciele is looking to expand its cardiovascular and pediatric product lines.

The company has several products in its pipeline. While one product, Fenoglide, was launched in February, the new Sular will be launched in mid-March. In addition to these two products, Sciele intends to launch several other products in 2008 including Aquelle, PrandiMet and a new formulation of Prenate Elite.

Going forward, the company expects to launch two to three new products every year. Sciele maintained its revenue and earnings guidance for 2008, which includes revenue contributions from the new Sular formulation. We believe the current share price represents an attractive entry point for long-term investors and we rate the stock a Buy. We recommend purchase up to the $28 level.

Arpita Dutt, CA, contributed to this report.

Read the full analyst report on SCRX.

Read the full analyst report on SCRX