With EU Approval For Puma Biotech's Breast Cancer Drug Unlikely, Cowen Downgrades

Puma Biotechnology Inc PBYI could face a setback in the launch of its breast cancer drug neratinib, as the European Medicines Agency's Committee for Medicinal Products for Human Use, or CHMP, relayed a "negative trend vote" after a meeting with the biotech company.

The Analyst

Cowen analyst Chris Shibutani downgraded shares of Puma Biotech from Outperform to Market Perform and reduced the price target from $128 to $68.

The Thesis

The CHMP's communication suggests EU approval is unlikely and that additional steps need to be taken in order to obtain marketing approval in the EU, Shibutani said in a Wednesday note. (See the analyst's track record here.)

Shibutani expects a negative outcome from the formal CHMP vote scheduled to take place in February, but said Puma Biotech could still appeal the decision. The likelihood of a reversal of a negative decision is low in the absence of a commitment to and/or production of data from an additional clinical trial, he said.

Cowen does not project a similar negative outcome for the drug in the rest of the world, but remains cautious on the prospects, Shibutani said.

The absence of EU approval will likely make the M&A narrative more challenging for Puma, the analyst said. Cowen has modeled an EU approval and was expecting the company to rope in a partner, with the former receiving royalties on sales, he said.

Cowen is removing adjuvant sales outside the U.S. from its forecast, but leaving U.S. — including metastatic — projections intact.