Healthcare analysts weigh in on biotech companies Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Sarepta Therapeutics Inc (NASDAQ:SRPT), as the stocks turned extremely volatile following recent news. While Valeant is close to announcing Perrigo’s Papa as new CEO, Sarepta shares react to the FDA’s decision to add voting questions in advance of an advisory panel meeting scheduled to take place on Monday to review Sarepta’s Duchenne muscular dystrophy drug.
Valeant Pharmaceuticals Intl Inc
Valeant shares are up nearly 8% today following the news that the company is finalizing a contract to name Perrigo Chief Executive Joseph Papa as its next CEO.
In reaction, BMO Capital analyst Alex Arfaei reiterated an Outperform rating on the stock, with a price target of $66, which implies an upside of 84% from current levels.
Arfaei commented, “If true, this should be viewed favorably for VRX as it removes another uncertainty for the stock. Mr. Papa is an industry veteran with extensive Pharma executive experience (Watson, DuPont, Searle). Moreover, he has led Perrigo’s through a number of acquisitions, including Elan in 2013, which was basically a tax inversion. Mr. Papa’s focus on buying consumer and OTC businesses (e.g., Omega, GSK OTC assets) is well aligned with Valeant’s strategy and key business units (e.g. Consumer, B+L). We continue to believe that VRX could be on the verge of a significant inflection point; and we look forward to reviewing the company’s 10-K, which we hope will be filed on time by April 29, before we can get more constructive on the stock.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Alex Arfaei has a yearly average return of 5.2% and a 64.3% success rate. Arfaei has a -13.6% average return when recommending VRX, and is ranked #673 out of 3907 analysts.
Sarepta Therapeutics Inc
Sarepta shares are changing direction from yesterday’s losses following the news that the FDA has set voting questions for sarepta advisory panel on Monday. The questions show evidence that despite the negative briefing document released yesterday, Sarepta still has a chance to receive an approval for its eteplirsen drug, which focus on Duchenne muscular dystrophy (DMD) patients.
RBC Capital analyst Simos Simeonidis commented, “We view the fact that panel members will have to vote on Monday as an incremental positive for SRPT, simply because of the understandable pressure committee members will be under, in the presence of the DMD community and families.”
“The bull case interpretation for SRPT is that if FDA wanted or had decided to reject eteplirsen, they would not have put voting questions as part of the agenda, in order to avoid putting undue pressure on the panelists. Put another way, if FDA wanted to approve the drug, there would be no better way to pressure committee members, than having them conduct a vote in front of the long suffering families and their boys.”ble pressure committee members will be under, in the presence of the DMD community and families,” the analyst continued.
However, “Despite that view, when we read through the actual questions and the language of the accompanying discussion, we see a document with the exact same tone and tenor as the January and April briefing documents. The questions and the discussion ask the panelists to focus on the trial conduct, the evidence for dystrophin and clinical efficacy. And we expect the answer to all of these to be No.”
The analyst reiterated a Sector Perform rating on Sarepta shares, with a price target of $7.50, which implies a downside of 50% from current levels.
Out of the 12 analysts polled by TipRanks, 4 are bullish on Sarepta stock, 7 are neutral, and one is bearish. With a return potential of 183%, the stock’s consensus target price stands at $31.19.