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Jefferies Lowers Estimates on Nanosphere

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Investment firm Jefferies on Tuesday lowered its revenue and price targets for Nanosphere, following the US Food and Drug Administration's denial of a marketing application for its Plavix (clopidogrel) metabolism test.

In a research note, analyst Jon Wood lowered 2011 revenue estimates to $3.3 million from $4.5 million, and 2012 revenue forecasts to $9 million from $17 million. He also lowered the price target on Nanosphere shares to $2 from $3.50.

Jefferies has a "Hold" rating on the company.

"While the near-term financial impact appears manageable, the event may spark concerns over the value of [Nanosphere's] sizeable (though distant) pipeline, where the bolus of its enterprise value seems concentrated," Wood said. He added that the FDA's denial could stunt Nanosphere's ability to place new Verigene instruments with customers "and impair its installed base growth trajectory, given what we perceive as few significant pipeline milestones until 2012."

Nanosphere said that it believes it can resolve the issues cited by the FDA in its denial letter and ultimately the test will gain pre-market approval. In his note, Wood agreed and said that the company plans to conduct additional clinical studies to address the deficiencies. However, he noted that the agency may take up to six months to review the revised PMA submission, which could delay commercialization of the test to the middle of 2012, assuming that Nanosphere can resubmit is application by late 2011.

In early Wednesday trading on Nasdaq, shares of Nanosphere were down 5 percent to $1.56.