Analysts Debate PTC Therapeutics, Inc. (PTCT) and DexCom, Inc. (DXCM) Worth Following Recent Binary Events

PTCT rises back amid hope for approval in nmDMD; DXCM suffers from new competition in diabetes market.


PTC Therapeutics Does Not Sway the AdCom, But Here’s the Silver Lining 

PTC Therapeutics, Inc. (NASDAQ:PTCT) shares found themselves in a Tuesday rut after the FDA let loose briefing documents before yesterday’s Advisory Committee for the drug maker’s candidate Translarna in nonsense mutation Duchenne muscular dystrophy (nmDMD). When the results first came in, the investors did not like the briefing documents they saw, which poked holes in prospects for approval, sending the stock on an almost 14% nosedive.

However, though yesterday’s Peripheral and Central Nervous Systems Advisory Committee only garnered one vote in favor of PTCT’s drug’s efficacy, investor confidence has surged back to the tune of 7% today in pre-market trading, with a light at the end of the tunnel of “inconclusive” data: positive sentiment from the FDA circling a future domestic trajectory for the nmDMD drug.

Top analyst Ritu Baral at Cowen is aware of the “fatal flaws” the FDA uncovered in the Translarna data package, but finds reassurance here that the agency “ultimately extends olive branch suggesting path forward with more clinical trials,” explaining: yesterday’s “Translarna FDA AdComm mirrored briefing doc sentiments: fundamental issues in the stats analyses of the NDA rendered data uninterpretable, in FDA’s view. While the panel concurred and voted the data package was inconclusive (negative, in our view), FDA supported continued optimistic dialogue on Translarna’s path forward in the US. We see no danger to ex-US Translarna from proceedings.”

As such, the analyst maintains a Market Perform rating on PTCT stock without listing a price target.

Though there had been an extremely discouraging tone in the briefing documents the FDA exposed before yesterday’s AdCom changed the game for the drug maker, Baral was pleasantly surprised to find a change in tone that became more “constructive” – particularly taking under account efficacy questions nipping at Translarna’s heels “[…] given the tenuous regulatory history of Translarna, with FDA representatives emphasizing throughout the panel that the agency was impressed with the design and conduct of the Ph3 ACT-DMD trial based on the exploratory subgroup from the Ph2 Study 007 trial.”

Ten panel members deemed Translarna’s data “inconclusive,” seeking further study, but notably, “strong patient testimony” reassured these skeptical panelists, particularly testimony from patients who had been on treatment for quite some time paired with patients who endured a sharp worsening of symptoms when no longer taking the drug, signaling advantageous treatment benefit. “Further, FDA took a ‘help me help you’ attitude and indicated additional willingness to work with PTCT to design an additional trial (using prospectively-defined populations and endpoints) which could support future approval,” adds the analyst.

Baral admits this is “not the worst outcome,” yet still assesses the panel to be “negative” for the drug maker’s shares. Overall, Baral’s positive sentiment hinges upon the future of the drug’s long-term development that could bring about U.S. approval.

Ritu Baral has a very good TipRanks score with a 53% success rate and a high ranking of #85 out of 4,669 analysts. Baral realizes 21.6% in her annual returns. When recommending PTCT, Baral earns 0.0% in average profits on the stock.

It appears the voice of the Street backs Baral’s sidelined vantage point on the drug maker. Out of 6 analysts polled by TipRanks in the last 3 months, 4 remain sidelined, while 2 are bullish on PTC Therapeutics stock. With a return potential of 13%, the stock’s consensus target price stands at $19.75.

DexCom Gets a Price Target Chop

DexCom, Inc. (NASDAQ:DXCM) shares plummeted nearly 33% yesterday after diabetes market share rival Abbott scored an unanticipated win yesterday from the FDA with its Libre blood glucose monitoring system for adults with diabetes in the U.S., that cleared the gates with an insulin dosing indication.

Oppenheimer analyst Steven Lichtman for one finds the dosing claim quite “a surprise,” noting that “expectations were that more work would be needed by ABT for that claim.” How does Dexcom’s investor skittishness factor in the wake of Abbott’s sudden green light? Look to the firm’s continuous glucose monitoring system (CGM), which now stares at an attractive price tag from Abbott in an arena that once belonged to Dexcom.

However, the analyst remains largely unfazed, believing the pullback presents a compelling opportunity to invest in a firm that importantly looks ahead to a variety of “market expansion opportunities,” as the domestic CGM market continues to be “underpenetrated in T1 pts (~20%),” with international opportunity to flourish as reimbursement develops- especially in Germany.

In reaction, the analyst reiterates an Outperform rating on DXCM stock while reducing the price target from $92 to $85, which implies a close to 387% increase from where the shares last closed. (To watch Lichtman’s track record, click here)

Lichtman underscores: “The dosing claim along with Libre’s already known no calibration requirement could create a near-term new patient acquisition headwind for DXCM and we thus adjust estimates. ABT did have to make some labeling concessions to FDA and Libre reimbursement still needs to be established. More importantly, the CGM market remains highly under-penetrated, DXCM’s Medicare opportunity is ramping here in 2H and two new DXCM systems are expected in 2018—G6 (1H) and the first GOOG Verily collaboration (2H). Yesterday’s news is a near-term negative for DXCM but we recommend buying on weakness with new drivers ahead.”

For 2017, the analyst is cutting his sales projections from $724 million to $717 million on the better Libre label while taking 2018 expectations down from $954 million to $922 million. For this year, the analyst calls for growth to hit roughly 25%, rising to 28.5% by next year, thanks to growth drivers like Medicare, the G6 launch, and ramping international prospects.

Wall Street is not convinced just yet on this biotech player, but cautious optimism is circling, as TipRanks analytics demonstrate DXCM as a Buy. Based on 14 analysts polled by TipRanks in the last 3 months, 9 rate a Buy on DexCom stock while 5 maintain a Hold. The 12-month average price target stands at $75.09, marking a 65% upside from where the stock is currently trading.

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