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Entry into North America for its liver product boosts the drug company’s shares

by Rachel Robson

News of a US commercialisation deal for IS Pharma’s (ISPH:AIM) Haemopressin and an immediate cash payment of $1.3 million sent shares in the specialist hospitals medicines group soaring 15% to 72.5p, and investors would be wise to keep buying.

IS Pharma’s licensee for Haemopressin, Orphan Therapeutics, has entered into an agreement for the commercialisation of the brand in North America with biotherapeutics firm Ikaria. Through the deal IS Pharma will receive an immediate cash payment of $1.3 million from Orphan Therapeutics and, once the brand is launched, the group will also receive royalties. As a result of this, IS Pharma says its results for the year ending 31 March 2009 will be materially ahead of expectations.

Orphan Therapeutics has initiated a rolling new drug application with the US Food and Drug Administration, seeking marketing approval for the treatment of hepatorenal syndrome (HRS) Type 1, a rare and life-threatening condition in late-stage liver disease. Haemopressin, known as Lucassin in the US, has also been granted orphan drug status and fast-track designation. Once marketing approval has been achieved, Orphan Therapeutics will transfer North American rights to Ikaria, which will deal with the post-market development and commercialisation of the product. The fact there is currently no drug approved in the US to treat HRS Type 1 also highlights the significance of the agreement.

A 40% slump in IS Pharma’s shares in June and July looks hard to justify, considering the company is profitable, has £2.3 million of net cash on its balance sheet and has a good track record of adding value through acquisitions. The £22.3 million market cap’s specialisation in hospital medicines in the areas of critical care, neurology and oncology also means demand is likely to remain buoyant.

Shares says: A great market opportunity and the stock looks cheap on a prospective price earnings ratio of 4.6. Buy