PTC Therapeutics: Oppenheimer Bull Cuts Target From $111 To $39; Jefferies Less Certain on Translarna

Shares of PTC Therapeutics, Inc. PTCT were down as much as 2 percent in the pre-market hours Tuesday following the U.S. FDA questioning the effectiveness of Translarna in nonsense mutation Duchenne muscular dystrophy (nmDMD).

PTC was notified that negative results from both Phase-2b and ACT-DMD Phase-3 trials did not provide "substantial evidence-of-effectiveness" and adjustments (pooled analysis and pre-defined subset-analysis) were characterized as post-hoc, rather than supportive.

Related Link: What You May Be Missing About PTC Therapeutics In Germany

In addition, the FDA noted that the NDA did not contain adequate information regarding the abuse potential of Translarna, a requirement for new molecules that cross the blood-brain barrier.

Analysts' Take

Jefferies analyst Gena Wang said although next step is still unclear, she sees limited chance for success even with a new phase 3 trial (likely 3–4 year delay in launch). Wang, who rates PTC at Hold, also cut the price target on the stock to $8 from $12.

Given the RTF letter, weak efficacy data and mixed EU voting history, the EU decision on full approval in DMD remains questionable.

Oppenheimer analyst Christopher Marai said, "We are lowering our PT to $39 from $111, removing the US-opportunity for Translarna for nmDMD from our estimates, given the unknowns. We also slowed our ex-US launch ramp to take into account potentially prolonged pricing negotiations."

Marai, who has an Outperform rating on PTCT, said the German pricing setbacks may be temporary, and in the meantime, importation pathway could sustain German patients.

"We see PTCT as undervalued given Translarna's base business and ex-US, ex-EU opportunity," Marai added.

Shares of PTC closed Monday's regular trading session at $7.98. They have been down 75 percent this year.