Paratek Pharmaceuticals Inc (PRTK) Lined Up for Potential Takeover, Ultragenyx Pharmaceutical Inc (RARE) Has Better Value Drivers Than Failed Ace-ER Program

A Peek Into Today's Volatile Biotech Stocks


Paratek Explores Sale; Cantor Sees $50 Target for the Stock

It’s a very rewarding trading day for investors in Paratek Pharmaceuticals Inc (NASDAQ:PRTK) with shares rising nearly 30%, making the stock Wall Street’s bull of the day. The reason? According to Bloomberg, Paratek is considering all strategic options for the company, including a sale. That said, this is not the first time Paratek has been discussed as a takeout target.

Cantor analyst Louise Chen commented, “We have always believed that PRTK is a very interesting asset in a consolidating space where many antibiotic companies have been taken out […] With positive Phase 3 data, PRTK is at the inflection point where potential acquirors would take a look since the asset has been de-risked. Furthermore, we think the market opportunity for Omadacycline is underappreciated and GI concerns in the community setting are overdone.”

Whether Paratek remains as a standalone company or is ultimately taken out, Chen believes there remains much value to be unlocked for the company’s shares. As such, Chen reiterates an Overweight rating on PRTK, with a price target of $50, which implies an upside of 101% from current levels. (To watch Chen’s track record, click here)

Overall PRTK has a Strong Buy analyst consensus rating. In the last ten months, the stock has received 6 Buy ratings. The average analyst price target of $39.40 translates into serious upside potential for PRTK of over 59% from the current share price.

Ultragenyx Failed Ace-ER Program Not the Only Iron in the Fire

Ultragenyx Pharmaceutical Inc (NASDAQ:RARE) shares are collapsing almost 14% today after the biotech firm revealed the Phase 3 trial of its Ace-ER candidate in GNE Myopathy was a miss. The drug was not able to meet its primary endpoint of exhibiting a statistically significant difference in the upper extremity muscle strength composite score (UEC) when juxtaposed against the placebo in adults with GNEM on back of 48 weeks of treatment.

In the wake of this bombed clinical trial, the RARE team is now wiping the program from its slate. However, failure is in the eye of the beholder.

For J.P. Morgan analyst Cory Kasimov, considering “this is a non-core asset,” while this is certainly “an incrementally disappointing development” even the bulls must acknowledge, the bigger picture for Ultragenyx still glimmers with potential beyond the loss of this program.

Therefore, the analyst reiterates an Overweight rating on RARE stock while cutting the price target from $87 to $76, which represents a just under 50% increase from current levels. (To watch Kasimov’s track record, click here)

“The headline is certainly negative, but we believe the fundamental impact of this failure on the overall business is quite minimal (Ace-ER only specifically counted ~$4 towards our prior $87 PT). In our view, KRN23 and trihep (UX007) are far greater drivers of value and sentiment for the name. Looking ahead, the remainder of the year and into next will be more about regulatory decisions than clinical data readouts. Overall, while we have some concern over the lack of near- to intermediate-term catalysts, we believe RARE has an attractive business model with a diverse pipeline of orphan disease assets (albeit one less now),” Kasimov contends.

Most of the Street sides with Kasimov’s confidence in this biotech player’s corner, with TipRanks analytics showcasing RARE as a Buy. Based on 9 analysts polled by TipRanks in the last 3 months, 5 rate a Buy on Ultragenyx stock while 4 maintain a Hold. The 12-month average price target stands at $77.88, marking a nearly 54% upside from where the stock is currently trading.

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