Many investors hope to win big on biotech stocks as shares can skyrocket when there’s good news. Case in point: Eiger Biopharmaceuticals (NASDAQ:EIGR) shares are soaring 40% in Thursday’s trading session, following the news that the drug maker has expanded its license agreement with Merck for lonafarnib to include Hutchinson-Gilford Progeria Syndrome (HGPS or Progeria), which is an ultra-orphan disease (incidence of 1 in 4 million live births).
With the addition of value for lonafarnib treatment of progeria, Wedbush analyst Liana Moussatos boosts her price target on EIGR to $53.00 (from $36.00), while reiterating an Outperform rating on the stock. (To watch Moussatos’ track record, click here)
Moussatos commented, “Progeria is a fatal premature aging disease and there are no approved drugs for progeria and average survival is only 14 years–making it a high unmet need. That lonafarnib treatment of progeria has a distinct survival benefit and that Eiger now has worldwide rights for progeria, HDV and all lonafarnib indications is a game-changer for the company.”
“In our view, the implications of Eiger obtaining rights for progeria are that lonafarnib could get approved two years earlier. We project launch of lonafarnib for progeria in 2020 and for HDV in 2022. Since progeria is an ultra-rare disease with only about 400 children worldwide and that lonafarnib treatment in a Phase 2 trial resulted in a survival benefit, we speculate that FDA may not require a Phase 3 trial for approval. Consequently, we anticipate clarity on FDA’s requirements for U.S. approval in H2:18, NDA submission, acceptance, review and approval in 2019. We speculate premium pricing is likely. If 300 of the 400 children worldwide are treated at $500,000/patient/year (which is likely conservative pricing), peak annual sales after an early 2020 U.S. launch could reach about $186 million in 2027,” the analyst continued.
As of this writing, all the 7 analysts polled by TipRanks, in the past 12 months, rate Eiger stock a Buy. With a return potential of 64%, the stock’s consensus target price stands at $28.