Concert Pharma Drops On Patent Litigation Setback; Mizuho Downgrades

Concert Pharmaceuticals Inc CNCE announced Friday the Patent Trial and Appeal Board decided not to grant the company a Post Grant Review petition in the patent '335 dispute with Incyte Corporation INCY.

The Analyst

Mizuho Securities' Difei Yang decided to downgrade the stock from Buy to Neutral and maintained the price target at $23.

The Thesis

The stock traded sharply lower on the news about the patent '335 dispute, but the decision isn't going to have implications for the ultimate outcome of the trial, said Yang, though she expects the litigation overhang will remain in the foreseeable future. The analyst sees the stock as fairly valued and decided to leave unchanged her peak revenue estimates of $130 million in 2028 for CTP-543 and $110 million in 2028 for AVP-786.

Two of Concert's Phase 3 trials are now expected in 2019 instead of 2018, and a new neurology candidate could be disclosed by 2Q 2018, said Yang. The new drug could lead to a higher stock price.

Price Action

The stock plunged more than 27 percent after the release of the news and recently traded around $20.

Related Links:

Morgan Stanley: Epizyme Has 'Blockbuster' Cancer Drug In The Making

Key Takeaways From The JPMorgan Healthcare Conference