Why Key Analyst Sees Puma Biotech Practically Doubling

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Puma Biotechnology Inc. (NYSE: PBYI) has made solid gains over the course of this week, starting with some positive news from the U.S. Food and Drug Administration (FDA), but now shares are being pushed even higher by an absolutely huge analyst call. On Tuesday, the regulatory body announced that it has accepted for review the New Drug Application (NDA) for Puma’s lead product candidate PB272 (neratinib).

Credit Suisse has an Outperform rating and increased its price target to $111 from the previous level of $54, more than doubling the target. This massive increase is brought about by increased sales expectations for neratinib in the HER2+ extended adjuvant setting.

As we have said time and time again, the FDA can make or break a company. In this case, a single decision is responsible for a large jump in the stock and an analyst doubling its price target. Also check out other key FDA decisions coming in the next two months.

The NDA submission was supported by the results of the ExteNET Phase 3 study, in which treatment with neratinib resulted in a 33% reduction of risk of invasive disease recurrence or death versus a placebo.

Specifically, the two-year invasive disease free survival rate for the neratinib arm was 93.9%, and the two-year rate for the placebo arm was 91.6%. For the pre-defined subgroup of patients with hormone receptor positive disease, the results of the trial demonstrated that treatment with neratinib resulted in a 49% reduction of risk of invasive disease recurrence or death versus the placebo.

Ultimately, Credit Suisse views the FDA’s acceptance of neratinib’s NDA as a key de-risking event, further supported by management’s guidance that FDA’s 60-day letter indicated that no review issues have been identified at this time.

As a result, Credit Suisse raised its 2017 and 2018 earnings (net loss) per share estimates to ($6.37) and ($1.37), from the previously level of ($7.92) and ($6.58), respectively. Thomson Reuters only has a consensus estimate for 2017, which calls for ($7.44).

Looking ahead, Credit Suisse anticipates a standard 10-month review period (note that management did not request priority review) with a July 2017 Prescription Drug User Fee Act (PDUFA) date. Given HER2+ extended adjuvant is a new indication, the brokerage firm expects an Oncologic Drug Advisory Committee (ODAC) panel, in line with guidance.

Shares of Puma Biotech were trading up nearly 3% at $69.93 on Thursday, with a consensus analyst price target of $76.50 and a 52-week trading range of $19.74 to $94.93.