08.09.07 

acus: GREED VS. FEAR: IMAGIFY U.S. DEAL BEST OPTION FOR ALL
While some ACUS shareholders may think that keeping U.S. marketing rights for themselves is still the best strategy, maybe it's time to face reality. As we approach the 4th anniversary of Acusphere's IPO and the serial dilutive financings that have brought us to the brink of NDA filing and insolvency, it's time to let Acusphere management and its board make the prudent decisions that balance maximizing Imagify's potential while avoiding the 'game over' scenario that Acusphere is now flirting with over the next year, in which financing looks ugly from a pure equity dilution or convertible bond offering, in our view. By now, Acusphere surely must have a short list of attractive partner candidates who have both the cash and strategic fit and should have concluded that this risk-reward profile of Imagify supports NPV's that are far above other internal projects in Phase 3. The conundrum Acusphere is in is that Wall Street doesn't seem to believe it will do a U.S. deal and therefore be forced to do a dilutive financing which may already be embedded in ACUS stock. Without a partnership, we believe Acusphere becomes the prey of vulture capitalists who may already own ACUS and are looking for more at dilutive terms with warrant coverage and all the rest. That's good for them, but bad for Acusphere and frankly makes it harder to achieve the vision of Imagify which includes hiring and keeping the talent to get this over the finish line. In short, morale matters a lot. Acusphere likely has far more bargaining power with potential pharma marketing partners than it does with Wall Street, which is why we believe management needs to change to rules of the game now. Contact Us for Full Report - PDF

05.07.07 

acus: IMAGIFY CONFERENCE CALL: LEADING ECHOCARDIOLOGIST, AND INDUSTRY EXPERT SHARE INSIGHTS: LISTEN TO THE REPLAY
If Dr. Mark Monaghan were on an FDA panel, he would vote to approve Imagify. Viewed through the lens of a seasoned pharmaceutical executive in this space, the scarcity of late stage development programs with $1B potential could attract a strategic buyer which values Acusphere much more than the Wall Street does. In our quest to discern Acusphere's value and address the elephant in the room - regulatory approval prospects for Imagify (both in the U.S. and Europe) - we hosted a conference call last Friday with a leading echocardiologist, Dr. Mark Monaghan of Kings College Hospital in London, and an experienced industry executive/consultant, Mr. William Ramage, both with approximately 30 years of experience in this space, which has been challenging for investors to understand. With Acusphere's 30% correction following the release of the RAMP-2 data earlier this week, the discussion focused on the clinical value of RAMP-2 (and RAMP-1) data and firsthand experience with Imagify in over 100 patients in the RAMP-2 trial in the context of existing nuclear and ultrasound contrast imaging agents as well as experience with other programs in development, namely Point Biomedical, whose NDA was filed in early 2006, but has not been approved by the FDA. Investors who choose to listen to the replay of this call, (which will be available through June 4th), may find the following points illuminating: 1) Imagify's clinical package appears to be far more robust than some others that failed to received FDA approval; 2) the probability of FDA approval for Imagify appears to be far higher than Point Biomedical's; and 3) the RAMP-2 data, including the differences in sensitivity and specificity versus nuclear including the variability among the readers, are understandable in light of the novel new technology, which requires training and the blinded protocol, which is not reflective of the real world experience. In short, a compelling case was made, in our opinion, that Imagify has a 'strong NDA filing' as characterized by a recently departed senior FDA official from this division who has joined Acusphere's regulatory team. While the hurdle for FDA approval is challenging, we believe that Imagify's prospects appear attractive. However, those prospects are not reflected in Acusphere's current stock price, in our view. Listen to the replay and form your own conclusions. (Replay Information: Domestic: 800-925-9942; International: 402-220-5396; Conf. ID: ACUSPHERE.) Contact Us for Full Report - PDF

05.01.07 

acus: FALSE NEGATIVE? IMAGIFY BEATS NUCLEAR ON SENSITIVITY SUPPORTING FDA APPROVAL, ACCURACY MATTERS MOST; STREET WANTS BLACK & WHITE; DOCS ONLY NEED NEW SHADES OF GRAY
Feeling a bit of chest pain? Consider this: Let's say 100 of us (perhaps far more given where ACUS is trading today) have CAD, and a heart attack might be just weeks away. Today, we could spend half our day, fork out $1000 for a nuclear stress test and our echocardiologist would tell 39 of us that we are fine (only 61% were diagnosed with heart disease by nuclear readers), and some of us would likely drop dead of a heart attack. Now along comes Acusphere's Imagify which based on today's RAMP 2 data got it right 73% of the time and just happens to cost half the price and can be done in 30 minutes in a doctor's office (not a hospital where nuclear tests are done). Perfect? No. Better than nuclear? We think so. We suspect echocardiologists might have a different opinion than Wall Street at this moment with ACUS down 30%. What would you rather have? A nuclear test that identified 76% (specificity) of the patients that did not have CAD, but only 61% (that's 39% false negatives) OR Imagify which had 10 more false positives (66% specificity) but correctly diagnosed 73% (only 27% false negatives) of patients who did have CAD? Would you rather be sent home not knowing you have a ticking time bomb or be held back for more tests to find out you're fine? On the margin, where we all really live, that's the essence of Imagify's value as we see it. If Acusphere can't make this case and FDA doesn't buy it, then maybe we'll just have another story about our dysfunctional health care system. Is the pain subsiding a bit now? Contact Us for Full Report - PDF

04.13.07 

acus: ORDER OF MAGNITUDE? ELEVATING TO TOP OVERALL PICK; WE SEE CLEAR PATH TO $1B VALUATION, RAMP 2 PHASE 3 WORTH 40% UPSIDE IN NEXT MONTH; IS THERE A BETTER RISK REWARD STORY?
Following our visit with Acusphere this week, we conclude that ACUS is dramatically undervalued and with the expected release of the last Imagify (first ultrasound contrast agent detecting myocardial perfusion) Phase 3 data (RAMP 2) in the next month, (which we expect to be positive), we believe there is a clear path to NDA filing by year-end, FDA approval in H2:08 and launch in 2009, and rapid initial adoption supported by new market research with Acusphere owning all U.S. marketing rights. As a result of our confidence level, combined with astonishingly low valuation - half the valuation since its IPO exactly 42 months ago today, we are reiterating ACUS as our top micro-cap stock pick, but now elevating ACUS as our single best idea through 2008. Having followed Acusphere for several years before its October 2003 IPO and since then, we believe we have a unique perspective to observe the evolution of this company which has steadily moved forward toward improving the probability of commercial success (that's decreasing its risk profile across all major attributes), which in our view, should have doubled its valuation to at least $400M since its $200M IPO valuation. But Wall Street's view as measured by Acusphere current $100M valuation has marked ACUS down by 50%. So who's right? How can a phase 3 specialty pharma company with a novel, first in class, product targeting a multi-billion dollar market, which owns all U.S. rights, has secured strong international partnerships, completed scale-up manufacturing, strengthened its management team across all functional areas, and even cleaned up its I.P. to preemptively avoid potential land mines, be worth just 10% of a company [MannKind (MNKD: Hold)] that has just started Phase 3, is a likely 3rd entrant in a market that based on the first entrant's challenges, does not yet exist? This report examines major facets of Acusphere's business and addresses investors' concerns which we believe are more perceived than real. Investors who carefully consider the potential of Imagify and the execution risks going forward, would be hard pressed to find a more compelling risk-reward profile than Acusphere, in our view. Contact Us for Full Report - PDF

03.20.07 

acus: IMAGIFY ALL THE PEOPLE: JUST 6% PENETRATION BY 2011 WORTH $1B VALUATION
While somber reflection may be in order on this 4th anniversary, investors may also recall that the start of the war also ended a biotech bear market and opened an IPO window that had been shut for three years. The first IPO of the new window (which is still open) was Acusphere, which while clearly underperforming by any measure, nevertheless tapped the equity markets (and several more times since) to fund its business plan and execute its strategy. So far, shareholders have taken the pain, but apart from Imagify's delayed NDA filing (par for the course in this business), Acusphere has done what it said it would, and most importantly, retained all U.S. marketing rights, which we suspect may ultimately be valued by an order of magnitude greater than what investors can buy ACUS stock for today. While Wall Street seems to love to own stocks where management owns 100% of the earnings potential (nearly a decade ago, we wrote the first report recommending Celgene (CELG) when the valuation was the same as ACUS before FDA approved Thalomid for Leprosy - talk about a tough sell to Wall Street!), in this market, investors seem to have been content to stay on the sidelines and revisit the story when NDA filing has better visibility. Well that visibility is now, in our view, with P3 results expected in Q2 and NDA filing expected in Q4. Sure, we're still a few years for revenue visibility and perhaps 3-4 before earnings visibility, but what's the downside from here? We're not suggesting that ACUS will follow the same path as CELG, moving from $100M to $20B in a decade, but $100M to $1B in five years, with a likely exit strategy from a hungry new health care giant such as GE where Imagify could be a very nice high volume, high margin consumable to fit with GE's installed diagnostic hardware base. That makes a lot of sense to us. Contact Us for Full Report - PDF

11.15.06 

acus: IMAGIFY GAINS VISIBILITY, NDA A YEAR AWAY, REVISING ESTIMATES TO REFLECT LATE '08 LAUNCH, 2010 PROFITABILITY
Adjusting Imagify commercialization time frame per management's updated guidance, we are formally revising our forecast where we push back everything a year in lockstep where FDA approval is received in 2008 followed by product launch in 2009 and profitability in 2010 where first revenue stream of $40 million should appear in 2009, instead of our previous estimate in 2008, followed by $100 million sales in 2010. Further, our EPS is adjusted from ($1.67) in '06, ($0.97) in '07, $0.25 in '08, $1.00 in '09 to updated EPS of ($1.97) in '06, ($1.48) in '07, ($1.31) in '08, ($0.34) in '09 and profitability in 2010 with $0.40. Accordingly we are lowering our target price from $10 to $9 as we are pushing back a year but maintain our Buy rating based on low price to its compelling risk reward profile. Our price target is based on 2010 EPS of $0.40 applying a 30x multiple discounting back a year at 30%. Contact Us for Full Report - PDF

08.10.06 

acus: Q2 RESULTS; TIMELINE TO NDA ON TRACK
While the RAMP1 data was successful on specificity and accuracy, which could be sufficient for FDA approval, the missed endpoint of sensitivity, likely due to variability among readers, is being addressed by management in the RAMP2 trial. With the results of RAMP2 expected in the Q4:06 to Q1:07 timeframe, NDA submission remains on track for a H1:07. Acusphere's recent cash raise provides it time to wait out RAMP2 results, which will have the benefit of lessons learned in RAMP1, with a potential partnership deal in our view not likely until these results are released. Assuming favorable RAMP2 data, the commercial potential of AI-700 as a cheaper, safer and faster alternative to nuclear stress test remains sizable, and we are encouraged by Acusphere's progress in improving RAMP2 trial design, as well as progress along other fronts including a strengthened IP position and manufacturing build out. Our 2006 per share loss estimate is widened from ($1.44) to ($1.67) to account for our expectation for higher R&D spend to support continued phase 3 trials through the end of the year, while we maintain our out year estimates and expectations for a mid 2008 AI700 product launch. We are maintaining our Buy rating and $10 price target. Contact Us for Full Report - PDF

06.07.06 

acus: MEATLOAF TEST: 'TWO OUT OF THREE AIN'T BAD' BUT NO SENSITIVITY ON THE STREET; WHILE ACCURACY FINE AND SPECIFICITY GREAT SUPPORT FOR FILING AND LIKELY APPROVAL, SENSITIVITY METRIC COMES UP SHORT WHICH COULD NARROW MARKET OPPORTUNITY; MAINTAIN BUY, LOWERING TARGET TO $10
The Meatloaf Standard: 'Two out of three ain't bad', didn't cut on Wall Street today with ACUS falling 30% as two of three readers concluded that AI-700 fell short on sensitivity on non-inferiority while achieving accuracy and specificity metrics. We are maintaining our Buy rating, but lowering our target price from $14 to $10 in the wake of today's unexpected shortfall in the sensitivity metric in the RAMP-1 trial. While we believe there are a number of explanations for this result - nuclear bias, inherent unfamiliarity with interpreting data from a novel technology platform as AI-700, the market apparently was in no mood to listen beyond the headline risk. ('Baby we can talk all night, but that ain't getting us nowhere...') We ourselves were caught off guard on this, given the promising Phase 2 data and what appeared to be a careful and deliberate dance with FDA where Acusphere appeared to be setting itself up for achievable lay ups. Indeed, the accuracy and specific metrics came in fine (specificity even superior), which clearly suggests Acusphere has a competitive NDA submission which even with the sensitivity shortfall may be approvable, but we now have to consider what the commercial potential may be and other catalysts such as a U.S. partner before RAMP-2 data are out with the trial expected to end later this year. While we aren't formally changing our model assumptions at this juncture with Q2:07 NDA filing and subsequent approval in mid-2008 still on track, in our view, our enthusiasm, at least near term is tempered and we suspect a potential partnership may be as well. Contact Us for Full Report - PDF

04.06.06 

acus: UPCOMING AI-700 PHASE 3 DATA HIGHLIGHTS EXPECTED Q2 NEWSFLOW
Acusphere was a solid performer in Q1, up 25% for the quarter as ACUS shares are finally waking up as expected ahead of the upcoming Q2 announcement of Phase 3 data for AI-700. ACUS shares continue to offer an attractive risk-reward profile, in our view, with a modest valuation of just $160M, half its IPO price roughly two years ago, despite management executing on the clinical timeline for AI-700, manufacturing scale up, and additional potential collaboration deals, of which we expect more details in Q2. With the first look at pivotal Phase 3 data for AI-700, which we expect to be favorable considering positive Phase 2 results and a similar trial design, an NDA filing just a year away, and AI-700's considerable market potential in a $2.4B contrast agent market, we continue to see upside for ACUS shares and as such, we are reiterating our Buy rating and $14 price target. Contact Us for Full Report - PDF

03.20.06 

acus: Q4 RESULTS; FIRST LOOK AT PIVOTAL PHASE 3 DATA UPCOMING
We believe that Acusphere's lead product AI-700 offers the potential of significant improvement in heart disease management and could emerge as a primary diagnostic imaging agent targeting a $2.4 billion contrast agent market. While we are pushing back our forecasts for a product launch slightly from late 2007 to 1H:08 to account for the manufacturing qualification timeline update provided earlier this month (no change to our out year estimates), AI-700 continues to make progress to an NDA filing and product launch. A first look at pivotal Phase 3 data from the first of two trials is expected in the second quarter, and we continue to anticipate favorable results based on phase 2 results and a relatively straightforward and similar phase 3 trial design. With an AI-700 NDA filing roughly a year away, and a first look at pivotal data upcoming and providing a key upcoming potential catalyst, shares of ACUS continue to offer a compelling risk-reward opportunity in our view, with ACUS valuation of just $130M and trading at less than half its IPO price two years ago, despite lower risk and increased visibility. We rate the shares a Buy with a $14 price target, or 25 times our fully taxed 2009 EPS estimate of $1.00, discounted annually at 33%. Contact Us for Full Report - PDF

11.11.05 

acus: Q3 RESULTS, AI-700 ON TRACK, PHASE 3 ENROLLMENT NEARING COMPLETION
We believe that Acusphere's lead product AI-700 offers the potential of significant improvement in heart disease management and could emerge as a primary diagnostic imaging agent targeting a $2 billion contrast agent market. Management remains on track with all major milestones in development, manufacturing scale up, and execution on its European partnership with Nycomed, and with an AI-700 NDA filing now just roughly a year away, and a first look at AI-700 pivotal data less than 6 months away providing key upcoming potential catalysts, shares of ACUS continue to offer a compelling risk-reward opportunity, in our view. We reiterate our Buy rating and $14 price target, or 25 times our fully taxed 2009 EPS estimate of $1.00, discounted annually at 33%. For those who prefer a more simplified approach to valuation, we note that applying a 5x sales multiple to our expectations for AI-700 to reach $200M in revenues by 2010 suggests a $1 billion valuation in the next five years, with the market currently discounting this potential by about 90% with ACUS valuation barely over $100M and trading at less than half its IPO price two years ago. Contact Us for Full Report - PDF

10.05.05 

acus: RAISING PRICE TARGET TO $14.00; AI-700 STORY TOO COMPELLING TO IGNORE ANY LONGER
Next week marks two years since Acusphere went public in a mini-IPO window that allowed management the needed cash to execute its business plan. And execute they have. We waited. And we waited. But with just a year before AI-700 NDA is filed, a blockbuster new ultrasound contrast agent that could become the new gold standard for screening for heart disease, we just had to get up to Boston for an update. We are glad we did, and to our pleasant surprise, management has delivered on all major milestones since going public from the enrollment of Phase 3 clinical trials to commercial scale up on large 5-10 kg quantities (no trivial feat for these young drug delivery technology companies), to the execution of its partnership with Nycomed, the dominant marketer of contrast agents in Europe, which happens to be on a parallel path for launching in AI-700 in early 2007 (European filing on track for late 2006). Acusphere, whose stock languished post-IPO and has been below most investors' radar screens, may be coming back. We are raising our price target by applying a 25 P/E multiple to our 2009 EPS estimate of $1.00 fully taxed and discounting by two years at 33% (a function of revenue forecasting uncertainty, not FDA approval), to arrive at a price target of $14, up from our previous target of $10. Additionally, our 2008 EPS estimate is lowered from $0.60 to $0.25 as we have tempered our sales forecast to assume a late 2007 (from mid-2007) AI-700 launch as well as reflecting increased dilution from recent financing. For those who prefer a more simplified approach to valuation, we conclude that we believe AI-700 has a high probability of achieving $200M or more in revenues by 2010, which applying a 5x sales to high growth specialty pharmaceutical companies, implies a $1 billion valuation in the next five years. Currently, the market has discounted this potential by about 90%, with ACUS valuation barely over $100M and trading at less than half its IPO price two years ago. Finally, with NDA filing now likely just a year away and with larger cap stocks having meteoric rises taking the BTK index to new highs, it may be time for investors to gravitate down the food chain to smaller cap names. Contact Us for Full Report - PDF

08.15.05 

acus: AI-700 ON TRACK FOR '06 FILING
We believe that Acusphere's lead product, AI-700, could offer significant improvement in heart disease management and emerge as a primary diagnostic imaging agent in the $10 billion coronary heart disease diagnostics market. Shares of ACUS are trading at less than half their IPO two years ago, despite Acusphere having achieved significant milestones towards approval, and as it nears the completion of pivotal trial enrollment and an expected 2006 NDA filing. With the company's execution risk profile improving while its valuation continues to get more compelling, we reiterate our Buy rating and a $10 price target, or 25x to our fully taxed 2008E EPS estimate of $0.60, discounted back annually at 25%. Contact Us for Full Report - PDF

05.24.05 

acus: INITIATING COVERAGE WITH A BUY RATING; DIAGNOSING HEART ATTACKS EARLY, FOR LESS
We are initiating coverage of Acusphere, Inc. with a Buy rating and a $10 price target, or 25x to our fully taxed 2008E EPS estimate of $0.60, discounted back annually at 25%. We believe that Acusphere's lead product, AI-700, offers the potential for significant improvement in heart disease management and could emerge as a preferred choice in the $10 billion coronary heart disease diagnostics market. Shares of ACUS are trading at less than a third of their IPO a year and a half ago, despite Acusphere having achieved significant milestones towards approval, including completion of the pilot phase of Phase III studies, passing the halfway mark in pivotal trial enrollment, and entering into a collaboration deal with European partner Nycomed, which we believe validates the technology while also helping to fund development. With the company's execution risk profile improving while its valuation continues to get more compelling, Acusphere, Inc. is our top micro-cap idea. Contact Us for Full Report - PDF