Insult to Injury: Puma Biotechnology Inc Gets Analyst Downgrade After EMA Kicked Back Its Breast Cancer Drug

Cowen's Chris Shibutani is out downgrading and cutting his price target on PUMA stock, now seeing a mere 2% in upside potential.


Did an iceberg just wallop into Puma Biotechnology Inc (NASDAQ:PBYI) stock? This biotech company’s shares are plunging at breakneck speed of almost 27%.

The European Medicines Agency’s (EMA) committee, the Committee for Medicinal Products for Human Use (CHMP) responsible for human medicines has indicated to the Puma team signs of a “negative trend vote” on neratinib. With the company’s asset designed as an extended adjuvant treatment of early stage HER2-positive breast cancer no longer looking to have favorable sentiment circling its Market Authorization Application (MAA), the Street is getting antsy on PBYI.

Cowen analyst Chris Shibutani is emerging a new skeptic on a stock he once backed with bullish optimism, now determining that “EU approval appears unlikely” for neratinib.

In reaction, the analyst downgrades from an Outperform to a Market Perform rating on PBYI stock while cutting the price target from $123 to $68, which implies a 2% upside from current levels. (To watch Shibutani’s track record, click here)

Essentially, a negative trend vote does not bode well for a positive CHMP opinion on the horizon for the drug’s MAA, meaning even further efforts would be necessary for PBYI to gain a marketing green light in the EU. Though the formal decision is set for next month, the Street is already running for the hills, betting on a “negative outcome” ahead.

“In our view, the CHMP’s ‘negative trend vote’ makes EU approval unlikely, makes us more cautious on ROW regulatory prospects, heightens risks relating to upcoming metastatic data, and likely blunts the scope of strategic options. Removing OUS adjuvant sales, but leaving US (including metastatic) projections intact, lowers our DCF to $68,” explains Shibutani.

Overall, though the analyst is aware February’s official decision hangs in the wings, he is no longer willing to take the gamble on this biotech player: “Final approval in the EU is not yet definitive, but we see it as unlikely […] We understand that Puma can appeal the decision, but see a relatively low likelihood of a reversal of a negative decision, absent a commitment to and/or production of data from an additional clinical trial. We surmise that a definitive decision on what approach to take (or not take) would involve consideration by PBYI management that could take time (months); hence, create uncertainty regarding prospects of turning this situation around.”

TipRanks highlights a largely confident Wall Street surveying the drug maker, with 5 out of 7 analysts in the last 3 months bullish on PBYI stock and just 2 hedging their bets on the sidelines. With a meaningful return potential of 70%, the stock’s consensus target price stands at $113.00.

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