Healthcare analysts commented on Clovis Oncology Inc (NASDAQ:CLVS) and Acura Pharmaceuticals, Inc. (NASDAQ:ACUR) following an FDA Committee decision and an FDA Fast Track designation, respectively. Each weigh in with conflicting views, explaining the implications the FDA actions will have on the stock.
Clovis Oncology Inc
Credit Suisse analyst Kennen MacKay commented on Clovis following an FDA ODAC (Oncolic Drugs Advisory Committee) decision. The committee met regarding Clovis’s NDA for lung cancer drug rociletinib, voting 12-1 to wait for results from the company’s Phase 3 study of the drug, TIGER-3, before making an approval decision.
The analyst notes that although it is not required for the FDA to follow the ODAC votes, it has 96% of the time in the last 6 years. As a result of the vote, the analyst believes the FDA will issue a CRL (Complete Response Letter) in the next 3-4 weeks, with company management providing updates on the future actions related to rociletinib. Ultimately, the analyst believes the ODAC decision indicates a low likelihood of approval. He states, “We do not anticipate US approval for rociletinib ahead of a TIGER-3 readout and have removed this from our model.” Similarly, the analyst believes this negative decision will also negatively affect European approval, stating, “Furthermore, we anticipate the EU may read-through the FDA’s decision and we have removed EMA conditional approval from our model.”
Going forward, the analyst expects the company to shift most of its attention to anti-cancer agent rucaparib, which has recently received Breakthrough Therapy designation by the FDA for treatment of advanced ovarian cancer. Despite the positive step forward, the analyst moves to the sidelines until he receives more information from management. He states, “Given capital uncertainties, we await additional guidance on cost-cutting, a rociletinib development path, and rucaparib submission prior to becoming more constructive.”
The analyst downgraded the stock to Neutral from Outperform and reduces his price target to $14 from $32.
According to TipRanks, Kennen MacKay has a 56% success rate recommending stocks with an average return of 4.1% per recommendation. Of the 6 analysts who have rated CLVS in the last 3 months, 33% gave a Buy rating while 67% remain on the sidelines. The average 12-month price target for the stock is $19.33, marking a 37% upside from where shares last closed.
Acura Pharmaceuticals, Inc.
Analyst Michael Higgins of Roth Capital explained his views on ACUR after the company announced it recieved FDA designation for LTX-04 with Fast Track development. LTX-04 is the company’s tablet developed to prevent the release of opioids as more pills are ingested. The FDA’s Fast Track process is an advanced review of the drug “allowing for increased communication and an expedited review.”
Data from LTX-04’s Phase 1 study is expected by the end of the month for the first cohort and by the end of June for the second Cohort. Higgest believes LTX-04 represents significant potential growth for the company due to the amount yearly opioid abuse. According to the analyst, investors should realize the massive opportunity the treatment represents as there are over 24 million opioid abusers per year in the U.S. alone as well as a “surge” in overdoses. Of this number, 20 million administer the drugs orally rather than injecting or snorting them. The analyst notes that the company is currently developing LTX-03, similar to LTX-04 but includes hydrocodone/acetaminophen. Higgens believes the “market opportunity…is 15x larger” for this treatment than for LTX-04.
The analyst concludes, “Given the FDA’s repeated cautionary statements that current abuse deterrent formulations (ADFs) do not have any impact on the primary form of abuse, swallowing too many opioids or taking them with alcohol, the Fast Track designation is not surprising, but should alert investors to the importance of the Limitx technology.”
Higgens reiterates a Buy rating on the company with a $6.00 price target, marking a 105% upside from current levels.
According to TipRanks, Michael Higgens has a 26% success rate recommending stocks with an average loss of (12.0)% per recommendation.