Global Blood Analyst Projects More Than 60% Upside On Receding Sickle Cell Drug Concerns

Shares of Global Blood Therapeutics Inc GBT have materially underperformed the broader biotech group, rendering its valuation attractive, according to Goldman Sachs.

The Global Blood Analyst: Analyst Paul Choi upgraded Global Blood from Neutral to Buy and increased the price target from $91 to $103.

The Global Blood Thesis: The launch dynamics of Global Blood's sickle cell disease drug with a haemoglobin endpoint; emerging competitive threats; COVID-19 headwinds; and the regulatory path in Europe have been acting as overhangs on the stock, Choi said in a Wednesday upgrade note. (See his track record here.)

Physicians are now willing to prescribe recently approved new SCD therapies such as Global Blood's Oxbryta and Novartis AG's NVS Adakveo, the analyst said.

These drugs also focus on long-term organ damage that can result from persistently low hemoglobin levels, he said, citing Goldman's proprietary survey and key opinion checks.

Between the two, Oxbryta is preferred twice as much as Adakveo, Choi said. 

Despite the  promise shown by pyruvate kinase-R therapies such as mitapivat in early SCD studies, they are unlikely to displace Oxbryta, the analyst said. 

"Also, with clarity on the regulatory path in Europe emerging, we see the opportunity for a differentiated product vs. hydroxyurea."

The analyst outlined the following as catalytic events:

• Oxbryta first-year launch curve in 2020
• HOPE 72-week VOC data due in mid-2020
• Updates on EMA filing in the first half of 2021
• Initiation of inclacumab pivotal study in the first half of 2021

GBT Price Action: At last check, Global Blood shares were adding 11.6% to $70.45. 

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