Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Biogen Inc (NASDAQ:BIIB) have recently given biotech investors a lot of food for thought with new clinical updates, from Valeant’s positive psoriasis drug data read-out to Biogen’s key abstracts shared yesterday at the CTAD conference. However, all favorable news is measured to a matter of degree. For one analyst, Valeant’s Phase III results simply do not cut it when it comes to shifting her away from sounding the alarm on the giant. Yet, from another analyst’s point of view, Biogen remains in solid standing.
Let’s dive in:
Valeant’s Clinical Pipeline Progression Not Enough to Rock the Boat
Though Valeant announced positive data yesterday evening from its Phase III trial of IDP-118, a topical fixed-dose combination of halobetasol propionate (a steroid) and tazarotene (a retinoid), in the treatment of moderate-to-severe plaque psoriasis, Mizuho analyst Irina Rivkind Koffler remains less than impressed.
From the analyst’s perspective, this clinical stride does not make a dent in altering her bearish standpoint, as she had already included the psoriasis drug in her model. As such, Koffler reiterates an Underperform rating on shares of VRX with an $11 price target, which represents a just under 29% downside from current levels.
“Both of IDP-118’s components are already available as generic ointments. We see some marginal commercial utility to this product but already model $175M in 2020 sales, which may be generous. We previously assumed a mid-2017 launch, which we now need to push to late 2018 since there is still another Phase III that needs to report out in 2017. There is therefore no upside to our estimates”
Additionally, looking ahead, the analyst continues to be apprehensive in terms of the troubled biotech giant’s 2017 guidance. “Valeant plans to report 4Q:16 earnings using the non-GAAP adjustment methodology utilized in 3Q, but also, to transition to a new EPS calculation that will be employed in 2017. We therefore expect estimates to come down further from here. It may not ultimately matter if investors are more focused on EV/EBITDA for valuation,” Koffler concludes.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Irina Rivkind Koffler is ranked #178 out of 4,274 analysts. Koffler has a 44% success rate and garners 13.7% in her annual returns. When recommending VRX, Koffler gains 17.0% in average profits on the stock.
TipRanks analytics exhibit VRX as a Hold. Out of 11 analysts polled in the last 3 months, 2 are bullish on Valeant stock, 7 remain sidelined, and 2 are bearish on the stock. With a return potential of nearly 43%, the stock’s consensus target price stands at $22.06.
Biogen Shares Encouraging Conference Abstracts
Biogen shares are currently rising close to 4% in pre-market trading after the biotech firm revealed key abstracts early yesterday from the 9th Clinical Trials on Alzheimer’s Disease (CTAD) conference describing the dose titration as well as the 24 month open label extension study data from the Phase Ib PRIME trial.
Further details are anticipated in today’s presentations, and Piper Jaffray analyst Joshua Schimmer keeps his eyes peeled to further “key details.” In reaction to the CTAD abstracts that have investors excited, the analyst reiterates an Overweight rating on BIIB with a price target of $335, which represents an 11% from where the stock is currently trading.
For Schimmer, “Generally consistent with company commentary heading into CTAD, the abstracts suggest that ARIA-E can be mitigated through a dose titration study (slowly increasing the dose), and that treatment with aducanumab for 24 months removes even more plaque (generally unique among Abeta antibodies) and patients are seeing ‘sustained’ clinical benefit.”
“We ultimately do not expect any definitive answer until aducanumab’s Phase 3 data. While aducanumab is not part of our BIIB model, the optionality from the program is an important driver of our OW thesis, along with a strong nusinersen launch,” Schimmer surmises.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, Joshua Schimmer is ranked #4,129 out of 4,274 analysts. Schimmer has a 39% success rate and loses 5.4% in his yearly returns. When suggesting BIIB, Schimmer forfeits 12.9% in average profits on the stock.
TipRanks analytics indicate BIIB as a Buy. Based on 11 analysts polled in the last 3 months, 7 rate a Buy on BIIB stock while 4 maintain a Hold. The 12-month average price target stands at $338.30, marking a nearly 17% upside from where the shares last closed.
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