ISRAEL 
HIGH-TECH & INVESTMENT REPORT

from the October 2003 issue


AGIS, IHTIR's #1 Choice for 2003 Poised for further Growth


At the outset of 2003 IHTIR featured a report on Agis Pharmaceutical with a caption "AGIS: IHTIR's #1 Choice for 2003 (http://ishitech.co.il/specnews.htm)

We then wrote "Agis Industries (1983) Ltd. is Israel's second largest pharmaceutical company. It is strategically positioning itself to move from being a local diversified pharmaceutical and consumer products enterprise into a specialized global pharmaceutical company." Agis shares have appreciated by more than 80% since the start of 2003 The financial reports continue to reflect strong growth and we continue to maintain a very positive stance. Quarterly revenues were up 24% to NIS 435.8 million, and up 26.5% to NIS 863.5 million in January-June.

Net income in the reported quarter totaled NIS 41.3 million, compared with NIS 11.7 million in the same period last year. Net incometotaled NIS 28.7 million , an increase of 146% over the same period last year. (NIS 4.36=$1.00) The percentage of sales outside of Israel, mostly in the United States are likely to reach as much as 55% of all sales. According to an anlayst report; Agis' US subsidiary Clay Park Labs (CPL) (34% of revenues) which develops, manufactures and markets generic dermatology products, has gained six FDA approvals since December 2001, most of them were first in the market, leading to a sharp improvement in results. In addition Chemagis, (20% of revenues), which develops and manufactures active pharmaceutical ingredients (APIs) for generic companies (including CPL and Teva) continues to grow at a fast rate as its product range increases. Both companies have a very strong pipeline of pending FDA approvals, which should add over US$ 30m to 2003 revenues.

It's US subsidiary CLP has 10 applications for registering new generic products filed, with an estimated ethical market turnover of $400m. The company believes that by the end of 2003 it will have obtained seven new products. Chemagis also has about six approvals pending for 2003. We assume that the combined effect of these new products would add about $ 30m to revenues in 2003, an assumption which could prove to be very conservative given the agreement with Dermik. We base our forecasts on the strong pipeline of CPL and Chemagis. Agis is growing from a local diversified pharmaceutical and consumer products enterprise to a specialized global pharmaceutical company.

In October 2002, CPL signed an agreement with Dermik Inc., an American pharmaceuticals manufacturer, for the sale and distribution in the U. S. of a generic drug, beginning from the first quarter of 2003. The company projects that sales from this product will reach US$ 15m in 2003

Agis is expected to announce in the near future an alliance agreement with an American drug company, which will market a patented topical treatment made by CPL for a product that recently received a FDA permission. The cream in question is protected by a patent, and treats skin infections with annual sales of around US$ 70m. Upon signing the agreement, Agis is expected to receive a one- time payment of over NIS 50 million from the American company.


Reprinted from the Israel High-Tech & Investment Report October 2003

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