Update on Aspreva (ASPV)

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An Update on Aspreva, and a New Stock Brief

Stock report feature Aspreva Pharmaceuticals (ASPV) surged 8.3% today on heavy volume as the company announced the appointment of a new CEO to replace the departing Richard Glickman. Dr. William Freytag, former CEO at Myogen (now owned by Gilead - GILD) will become the new chairman and CEO. Freytag took the helm at Myogen shortly after its founding and lead the company through the development of two drug compounds that later earned a $2.5 billion buyout bid. I think the hiring team that placed Freytag at Aspreva should be taken out to dinner by shareholders, and from today’s market reaction I’m not alone in thinking that.
While Richard Glickman has a long history of running startup companies, he really hit a homerun at Aspreva with the excellent CellCept deal with Roche. Still, there seems to be additional value that can be unlocked here, and the appointment of Dr. Freytag is an encouraging step. I will certainly be one interested observer waiting to see what will come of Aspreva’s “indication partnering” methodology, and whether or not Freytag can negotiate the next deal for Aspreva, which I believe will be the real catalyst for this stock to move above $25. The other angle that could be pursued here, of course, is a straight buyout deal with a larger pharmaceutical company, or perhaps a management-backed IPO should Dr. Freytag feel up to the challenge.

Tomorrow, the newest stock brief will be released, featuring a Top 25 pick. Although the arguments laid out for the stock are unconventional given the value investing philosophy used at this site, the stock nonetheless appears to be a compelling value that could rapidly appreciate for several reasons. Hopefully by this weekend, the newest stock report on American Eagle (AEO) will be finished and ready for release as well. An advance hint: it isn’t often that a double-digit grower with such a strong brand name (not to mention an excellent management team) trades for under 7x operating cash flow. Hopefully, the report will shed some light on teen retailers and AEO in particular and prove that some should command higher multiples than they are being given.