Biotech Beat: Analysts Bullish on Sarepta Therapeutics Inc (SRPT) and Horizon Pharma PLC (HZNP)

Analysts are bullish on both Sarepta Therapeutics Inc (NASDAQ:SRPT) and Horizon Pharma PLC (NASDAQ:HZNP) as the two biotechnology companies advance their pipelines and clear many risks, including pricing ambiguity.

Sarepta Therapeutics Inc

Stephen Brozak of WBB Securities updates his coverage on Sarepta with a continued Strong Buy rating and an unchanged 12-month price target of $40. The analyst weighs eteplirsen, Sarepta’s pipeline drug for Duchenne Muscular Dystrophy, against drisapersen, competitor’s BioMarin’s pipeline drug for DMD.

An FDA panel will convene on Tuesday, November 24 to discuss drisapersen. Brozak notes that even if the drug’s findings are “less than enthusiastic or even negative, drisapersen could eventually be approved with a black-box warning” because there is currently no treatment for this devastating disease. The analyst explains, “To withhold any drug that demonstrates even moderate improvement in treating the disease, even if there are significant side effects, is unlikely.” Furthermore, there is a “vocal group of parents” with children who suffer from the disease who would “not hesitate to criticize a negative decision on drisapersen approval.”

By the same token, Brozak believes that eteplirsen will also be approved after it faces another panel in early 2016. He notes, “We believe it is likely that eteplirsen will be approved. In our opinion that is where the competition between the two drugs will begin and we believe the contest will be won by eteplirsen because of greater efficacy and less risk of side effects.” The analyst believes that the DMD doctors will eventually choose eteplirsen over drisapersen after examining the effects of both drugs.

According to TipRanks, 11 analysts have weighed in on Sarepta Therapeutics in the last 3 months. Out of these analysts, 8 are bullish on the biotech company while 1 is bearish and 1 remains on the sidelines. The average 12-month price target between these 10 analysts is $35.55, marking a 6.56% potential upside.

SRPT consensus

Horizon Pharma PLC

Difei Yang of Brean Capital upgrade Horizon Pharma from Hold to Buy and issued a price target of $31 after acknowledging the company is now low risk. Specifically, he noted that pricing practices and the Depomed deal closure are no longer negative factors for the company.

After speculating that the partnership between Horizon and Depomed would not come to fruition, Yang’s prediction came true. The analyst explains, “Horizon decided to withdraw the offer for the Depomed acquisition after an unfavorable court ruling that granted Depomed’s motion for preliminary injunctive relief of Depomed’s poison pill and other bylaw amendments from Depomed’s board of directors filed on July 13, 2015.” The analyst notes that Horizon’s formal withdrawal from the partnership “removes a big overhang” and will allow the company to focus on “smaller business development deals.”

Yang also comments on the new practices to promote pricing transparency. Since September, exorbitant drug prices have been in the news and even caught the attention of Hillary Clinton as an issue for 2016 presidential election. The analyst explains, “While the list prices of many pharmaceutical products have increased significantly recently, the net realized price of these products was below CPI on an aggregate level.” For Horizon Pharma, the analyst notes that the majority of the pay increase was given back to patients through rebates, co-pay assistances, and patient assistance.

Five of the 6 analysts polled by TipRanks in the last 3 months are bullish on the biotech company while 1 analyst remains on the sidelines. The average 12-month price target between these 6 analysts is $40.25, marking a 98% potential upside.

HZNP consensus

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