Roth Capital’s healthcare analysts weigh in on biotech stocks Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) and bluebird bio Inc (NASDAQ:BLUE). While Catalyst pharma received a “Refusal to File” letter from the FDA, bluebird announced the treatment of the first multiple myeloma patient. Below are the ratings along with current price targets and comments from lead analysts Scott Henry and Elemer Piros.
Catalyst Pharmaceuticals Inc
Catalyst Pharmaceuticals shares fell nearly 37% yesterday after the company announced that it has received a “Refusal to File” letter from the FDA with regards to its New Drug Application (NDA) for Firdapse to treat Lambert Eaton myasthenic syndrome (LEMS). The FDA has found the application not sufficiently complete.
In reaction, Roth Capital analyst Scott Henry slashed the price target for the stock to $3.25 (from $7.00), while reiterating a Buy rating.
Henry commented, “It appears that the FDA may be requesting further supporting data that could be generated without additional clinical trial work. It is surprising, in our opinion, that the FDA would simply not request this information during the rolling submission given the Breakthrough Therapy Designation. The risk at this point is that a “bump in the road” becomes a longer-term issue that derails the filing indefinitely.”
“Best case, CPRX gathers the needed data in 3-4 weeks, meets with the FDA in 2Q16, and the filing is accepted in 2H16. This adds ~1 year of discounting to our valuation and reduces our approval probability to 75% (from 85%) to assume a modestly higher chance that Jacobus gets to market first. This values the shares at $5.50/share including other assets,” the analyst continued.
Henry concluded, “Let’s call it 50/50 on optimistic versus pessimistic scenarios. Averaging $5.50/share and $1/share equates to a $3.25/share price target.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Scott Henry has a yearly average return of -0.6% and a 32% success rate. Henry has a -18.8% average return when recommending CPRX, and is ranked #2374 out of 3640 analysts.
bluebird bio Inc
In addition, Roth Capital’s Elemer Piros reiterated a Neutral rating on shares of bluebird bio, with a price target of $62, after the company announced the treatment of the first multiple myeloma patient with its bb2121 CAR-T therapy.
The analyst continued, “As reported last December by Dr. Korchnderfer, two patients treated with the highest dose of the therapy experienced very meaningful responses. One of them a “stringent” complete remission and for the other four weeks after infusion of the therapy, bone marrow plasma cells were undetectable. Both of these patients experienced cytokine release syndrome, typical with CAR T therapies, which triggers fever, tachycardia, hypotension, delirium, hypoxia and coagulopathy. Successful management of these side effects may lead to durable remissions for a heavily pretreated patient population with few remaining alternatives.”
According to TipRanks.com, analyst Elemer Piros has a yearly average return of -35.6% and a 14.7% success rate. Piros has a -33.5% average return when recommending BLUE, and is ranked #3600 out of 3640 analysts.
Out of the 10 analysts polled by TipRanks, 6 rate bluebird bio stock a Buy, while 4 rate the stock a Hold. With a return potential of 62%, the stock’s consensus target price stands at $88.