BofA Downgrades Takeda On Suspension Narcolepsy Drug Trials

Takeda Pharmaceutical Co Ltd TAK announced the suspension of the Phase II trials of its narcolepsy drug candidate TAK-994 due to safety issues. Following the suspension of this promising pipeline, the company’s growth recovery prospects appear dismal, according to BofA Securities.

The Takeda Pharmaceutical Analyst: Tatsuyuki Arai downgraded the rating for Takeda Pharmaceutical from Buy to Neutral, while reducing the price target from $22.40 to $17.60.

The Takeda Pharmaceutical Thesis: TAK-994 was considered a promising candidate, with estimated peak annual sales of more than 300 billion yens ($2.7 million), Arai said in the downgrade note.

“The timing of the trial suspension comes as a negative surprise, given a positive safety profile had been confirmed in previous trials. Takeda was planning to announce its efficacy data in early 2022, but this announcement will also be canceled,” the analyst wrote.

“We anticipate flat earnings through FY3/24, but consecutive major patent expirations such as for Vyvanse (ADHD) and Entyvio (ulcerative colitis) will likely lead to profits declining thereafter,” he further added.

TAK Price Action: Shares of Takeda Pharmaceutical had declined by 8.55% to $14.70 at the time of publication Thursday morning.

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