Cantor analyst Mara Goldstein sheds light on Seattle Genetics, Inc. (NASDAQ:SGEN) after the bad news broke of a FDA partial hold placed on clinical trials of the firm’s pipeline drug vadastuximab talirine, designed to treat acute myeloid leukemia (AML). Initially, shares fell 15% following the announcement.
Pinpointing concerns in regards to hepatotoxicity, chemical-driven liver damage, the FDA has placed a clinical hold on all studies for the drug. After 6 cases across the company’s clinical program were identified, the analyst is sidelined and wary, noting that the clinical hold “places [a] cloud of uncertainty on this program.”
Goldstein asserts that not all trials have ended, underscoring, “over 300 patients have been treated with the candidate […] the partial hold means that patients already on study drug may continue with re-consent. […] While no new studies will be initiated, ongoing trials, including the Phase III CASCADE study in older AML patients, will continue. This is a positive sign, but given the run-up in the shares, we feel that vadastuximab talirine is priced into SGEN’s valuation.”
Anticipating negative investor pull-back, the analyst believes, “Given the run-up in the shares based on this program, we expect the shares will retreat.”
Ultimately, “We think that much of SGEN’s pipeline is already reflected in the shares, and forms the basis for our Neutral rating. […] The pipeline has multiple programs, but we think the valuation reflects this, and with a hold on vadastuximab, we are not inclined to be more constructive on the shares,” the analyst surmises.
Goldstein reiterates a Neutral rating on the stock with a target price of $43, which implies a downside of 20% from where the stock is currently trading.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, one-star analyst Mara Goldstein is ranked #3,135 out of 4,291 analysts. Goldstein has a 42% success rate and loses 0.5% in her yearly returns. However, when recommending SGEN, Goldstein gains 10.0% in average profits on the stock.
TipRanks analytics exhibit SGEN as a BUY. Out of 10 analysts polled by TipRanks in the last 3 months, 4 are bullish on Seattle Genetics, and 6 remain sidelined. With a return potential of 4%, the stock’s consensus target price stands at $56.
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