Pacific Growth upgraded Protein Design Labs (PDLI) to overweight.
Protein Design and Genentech agreed in principle to resolve a patent dispute over asthma drug Xolair and to share profit from psoriasis treatment Raptiva and cancer drug Avastin. Analyst Thomas Dietz says under the proposed deal, Genentech will take a license for Xolair, Raptiva, and Avastin. Protein Design will agree to royalty reductions above certain undisclosed "significant" sales thresholds.
Dietz views the potential resolution, as outlined, as a positive move, as the agreement removes the potential for costly litigation and the threat to Protein Design's patents. Protein Design will now include royalties from Xolair, Raptiva, and Avastin in its 2004 estimates.
Dietz upgraded the $56.8 million 2004 royalty revenue estimate to $64.8 million, and upped the $64.8 million total revenue estimate to $72.8 million. He says these estimates are conservative; he still sees the approval and launch of Avastin in the third quarter of 2004.