Puma Biotechnology Inc (NASDAQ:PBYI) has won FDA approval for its lead candidate Nerlynx (neratinib), sending shares up 9% in Tuesday’s trading session. The drug treats breast cancer patients that are HER2 positive and reduces the risk of a relapse. According to the NCI, nearly 40,000 breast cancer patients across the United States are HER2-positive, accounting for 15% of all cancer patients.
J.P. Morgan analyst Cory Kasimov points out that the FDA approval is significant, as it will allow the company to “shift to strategic optionality and commercial readiness/uptake.” The analyst notes that the ability to prescribe Nerlynx to HER2 came as a relief to investors who had expected the ODAC to restrict the drug to HR+ patients. As a result, Kasimov is modeling “peak WW sales of ~$1.7 billion in the extended adjuvant setting.” Kasimov explains, “Our revenue build reflects significantly more penetration into the HR+ patient population vs. HR-. We currently model a $90K annual gross price from which we discount 35% for assumed gross-to-net and compliance adjustments. We suspect our overall pricing assumption could prove conservative.”
Kasimov looked at recent timing updates of Phase 3 NALA data for the first half of 2018 opining that “The metastatic setting could provide an additional boost to revenue…and a backstop to strategic options.” Based on these stats, the analyst is projecting “75% probability of success and over $500M in peak WW revenue,” all while noting that the ongoing assessment of other types of tumors could bring an even greater upside to the long-term forecast. Puma is not expected to announce a product price before the official launch in September out of strategic concerns.
The analyst believes that “shares have room to move materially higher from prevailing levels” and enthusiastically maintains PBYI stock as an Overweight. (To watch Kasimov’s track record, click here).
TipRanks analytics indicate PBYI as a Strong Buy. Out of 6 analysts polled by TipRanks in the last 3 months, 5 are bullish on the stock, while 1 remains neutral. The consensus target price stands at $105.80, revealing a nearly 13% upside from current levels.