News from Achillion Pharmaceuticals, Inc. (NASDAQ:ACHN) and bluebird bio Inc (NASDAQ:BLUE) have sent biotech investors running for the hills and have left shares crashing in their dust. While one analyst believes Achillon’s side effects indicated in a trial evaluating its pipeline drug ACH-4471 coupled with development stalls are all the more reason to remain bearish on the stock, the other remains confident on bluebird’s funding and positioning entering into the new year, though investors were less than thrilled with abstracts posted ahead of next month’s ASH conference. Let’s take a closer look:
Achillion Pharmaceuticals, Inc.
This morning, Achillion reported third-quarter earnings and offered a clinical progress update on its pipeline revealing two side effects in the multiple ascending dose (MAD) study of ACH-4471, the firm’s oral complement factor D inhibitor drug that treats diseases such as paroxysmal nocturnal hemoglobinuria (PNH) and C3 glomerulonephritis (C3G). Additionally, the biotech firm indicated that interim results from the Phase I study will now be presented in the first half of 2017.
In reaction, shares have been sent plummeting close to 29%. On the heels of “risks” stemming from “liver signals and developmental delays” from the drug, Chardan analyst Madhu Kumar reiterates a Sell rating on shares of ACHN with a $5 price target, which represents a close to 17% increase from current levels.
The analyst asserts, “Continued delays in healthy volunteers portend more significant delays in the PNH setting. Recall from our 14 July 2016 initiation that ‘additional data from the multiple ascending dose arm [for ACH-4471 is] expected in 3Q16.’ Today’s announcement pushing back interim results for the MAD study to 1H17, particularly in light of the liver enzyme elevations observed, is particularly worrying in terms of developmental timing.”
“Considering that the company is already facing delays in development in the healthy volunteer setting, we feel today’s delays represent the beginning of developmental challenges for the ACH-4471 program if and when the drug moves into patients in CMD,” Kumar contends.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Madhu Kumar is ranked #3,848 out of 4,165 analysts. Kumar has a 40% success rate and confronts a 16.3% loss in his annual returns. However, when recommending ACHN, Kumar gains 29.5% in average profits on the stock.
TipRanks analytics exhibit ACHN as a Buy. Based on 6 analysts polled in the last 3 months, 3 rate a Buy on ACHN, 2 maintain a Hold, while 1 issues a Sell. The 12-month price target stands at $10.25, marking a nearly 138% upside from where the shares last closed.
bluebird bio Inc
Yesterday evening, Bluebird posted its third-quarter print coupled while releasing abstracts for next month’s American Society of Hematology (ASH) meeting, where the firm will offer updated data from the ongoing clinical trial of its pipeline drug, LentiGlobin, a gene therapy designed to treat transfusion-dependent beta-thalassemia while also being tested for sickle-cell disease. Today, BLUE shares have dipped 11%.
Yet, Piper Jaffray analyst Joshua Schimmer disagrees with negative investor reaction and believes BLUE’s forward trajectory in sickle cell “bodes well,” reiterating an Overweight rating on BLUE with a price target of $95, which represents just under a 3% increase from where the shares last closed.
Looking ahead to the conference, the analyst notes the updated data will make use of the “old” manufacturing process, which “we don’t believe this is a good proxy for what to expect from the new formulation […] Thus, any good updates from the ‘outdated’ version bode well for the ‘new and improved’ LentiGlobin, but disappointing results would only serve to reinforce the need for the LentiGlobin improvements.”
“Consistent with the update a few weeks ago at the company’s analyst day, BLUE plans to report updated LentiGlobin clinical data (using the prior manufacturing process) at ASH. In our view, the recent process optimization modifications which meaningfully increase transduction rates and VCN, combined with positive regulatory feedback on the path forward, continue to position the company for a meaningful 2017, with clinical data from patients treated with the new process improvements likely later next year. BLUE remains well funded to execute and ended the quarter with $727M in cash and cash equivalents,” Schimmer concludes.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Joshua Schimmer has a 27% success rate and loses 13.0% in his yearly returns. When recommending BLUE, Schimmer forfeits 32.2% in average profits on the stock.
TipRanks analytics demonstrate BLUE as a Strong Buy. Out of 11 analysts polled by TipRanks in the last 3 months, 10 are bullish on Bluebird stock while 1 is bearish. With a return potential of nearly 113% upside, the stock’s consensus target price stands at $92.67.