Wedbush Reiterates Outperform On Pharmacyclics Following FDA Approval Of Imbruvica


The FDA granted full approval today to Pharmacyclics’ (PCYC) Imbruvica to treat Chronic Lymphocytic Leukemia (CLL) and as front-line therapy to treat CLL patients with 17p deletion. The decision comes ahead of the Oct 7 PDUFA date, and was based on data from the Phase III RESONATE study where Imbruvica demonstrated significantly improved PFS, OS and ORR vs ofatumumab (Arzerra) in r/r CLL/SLL patients.

In reaction to the approval, Wedbush analyst David Nierengarten today reiterated an Outperform rating on PCYC with a $225 price target, which represents a potential upside of 107% from where the stock is currently trading.

The following bullets contain some highlights from the report:  

  • The full FDA approval triggered a $60M milestone payment to PCYC from partner Janssen. We estimate PCYC has ~$700M in cash on hand, and expect <$80M of cash will be burned through mid-2015 when consistent profitability is expected to set in.
  • The updated label removes mention to renal toxicity, since an increase was not observed with Imbruvica use in the RESONATE study. Incidents of severe (>=Grade 3) infections were also similar between the Imbruvica and Arzerra arms, despite a longer median time on treatment for Imbruvica (8.6 vs 5.3 months). We believe this positive safety profile is a key competitive advantage for Imbruvica, since tolerability is a critical issue in CLL due to the elderly patient population and long duration of therapy. Recall that idelalisib (Zydelig) was approved last week by FDA to treat CLL with a boxed warning that alerts to the risks to treatment, including liver toxicity, pneumonitis, intestinal perforation, diarrhea and colitis. In addition to the quality-of-life concerns, Imbruvica therapy is less-expensive (monthly cost of ~$8K vs ~$12K per month in the US) and more convenient to administer (oral vs oral+IV) compared to the Zydelig/rituximab combo.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform analyst David Nierengarten has a 13.9% average return and a 48.0% success rate. Nierengarten is ranked #527 out of 3003 analysts

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