Credit Suisse has released a biotech research report from analysts Jason Kantor and Jeremiah Shepard that has their top picks for upside potential in the biotech segment for 2015. The analyst firm updated its top picks to PTC Therapeutics Inc. (NASDAQ: PTCT) and Esperion Therapeutics Inc. (NASDAQ: ESPR), while removing Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) from the top picks list. Both top picks have significant clinical and regulatory milestones, and both have unpartnered global rights, which could ultimately drive premium acquisitions. Credit Suisse sees shares perhaps doubling in 2015.
First, PTC has become substantially derisked with the European approval of Translarna for the treatment of muscular dystrophy (DMD). Credit Suisse has high confidence in the fully enrolled confirmatory Phase 3 trial for DMD that is expected to read out in October 2015.
There are additional announcements anticipated in the coming year that Credit Suisse expects to be positive:
- The potential early filing for conditional approval in Europe for cystic fibrosis
- A more rapid regulatory strategy for DMD in the United States
- Updates on its pipeline program for spinal muscular atrophy (SMA) with partner Roche
As a result, Credit Suisse has a risk adjusted price target of $66. Also assuming positive Phase 3 data in DMD, the company would be worth substantially more as a stand-alone or potential take out.
Shares of PTC closed Wednesday down about 2% at $46.90. The stock has a consensus analyst price target of $56.57 and a 52-week trading range of $14.51 to $48.67.
Credit Suisse also mentioned Esperion in its report:
We are adding Esperion to our Top Pick list ahead of multiple catalysts through 2015, which together could drive significant outperformance and ultimately a lucrative partnership or premium takeout. Key catalysts include (1) submitting final animal carcinogenicity and toxicology data to FDA by year end 2014, (2) potential lifting the partial clinical hold in H1:15 — the biggest overhang in our view, (3) Phase IIb data from Study 009 in combination with statins in March 2015, (4) Phase II data from Study 014 in patients with hypertension in Q2:15, and (5) end of Phase II meeting with FDA in mid-2015. If all goes well, ESPR will be ready to launch a Phase III program for its novel oral cholesterol lowering drug by year-end 2015. We believe the positive IMPROVE-IT data for Merck’s Zetia (another LDL-C lowering drug) support the LDL-lowering hypothesis and predicts clinical benefit and a more favorable regulatory environment for ETC-1002.
The analyst firm’s risk adjusted price target is $41 for Esperion, with multiple catalysts to lower its risk adjustment. The model and target price are based on a partnering scenario, and ETC-1002 could be worth more to an acquirer.
Shares of Esperion closed Wednesday up almost 1% at $31.88. The stock has a consensus analyst price target of $46.67 and a 52-week trading range of $12.06 to $34.42.
Finally, Regeneron was removed from Credit Suisse’s Top Pick list after significant stock appreciation. Credit Suisse still views the company as a core buy and hold candidate with a long-term view of its products, pipeline and technology.
Shares of Regeneron closed Wednesday up almost 1% at $424.41. The consensus analyst price target is $404.15, and the 52-week trading range is $257.69 to $425.28.