Pipeline updates from biotech companies Cerus Corporation (NASDAQ:
Cerus’ INTERCEPT Blood System is intended to reduce the risk of transfusion transmitted infection by inactivating various ailments in donated blood. The company will receive initial funding of more than $30 million to support the assessment of INTERCEPT in Puerto Rico, currently impacted by the Zika Virus, with up to $180 million allocated over the 5 year contract period.
According to the analyst, this announcement reaffirms her belief that “CERS stands to benefit materially from the emergency of Zika Virus.” She notes that concerns regarding the quick spread of the virus “illustrate the value” of blood safety products like INTERCEPT. The analyst also believes the support of BARDA, which works with companies to advance FDA approval and with the FDA itself, increases the likelihood of FDA approval of INTERCEPT and represent a catalyst for the stock.
The analyst notes a quelling of investor concern regarding the “significant” investment of CERS’ U.S. Phase 3 trial for INTERCEPT now that the company has financial support from BARDA. Although she is unsure of whether CERS will receive all $180 million of the funding, she expects the company to be profitable going forward. She explains, “We think this contract greatly increases the likelihood of the (company) reaching profitability without having to raise any additional equity.”
The analyst reiterates a Buy rating on the company with a $10 price target.
As of this writing, both analysts who have rated the company in the past 3 months gave a Buy rating. The average 12-month price target for the stock is $10, marking a 75% upside from where shares last closed.
Ariad Pharmaceuticals, Inc.
The analyst also provides his views on Brigatinib in the first-line setting, noting that the company has begun enrollment in the ALTA 1L trial for label expansion in order to take advantage of a larger market opportunity. He states, “ARIA clearly recognizes the importance of capitalizing on the current window of opportunity to enroll patients as aggressively as possible.” The analyst sees brigatinib as a viable competitor due to its various strengths. He explains, “We see brigatinib’s strong efficacy profile… coupled with what we believe to be a well-tolerated dosing strategy (90mg initial one-week dosing, followed by 180mg maintenance) as keeping brigatinib well-positioned to compete in the front-line setting.”
Shibutani states that management’s reiterated 2016 revenue guidance of $170-$180 million is “readily achievable” due to various growth initiatives for approved cancer drug Iclusig. Such initiatives include increased sales and marketing efforts, likely label updates of the safety experience from the PACE trial, and price increases. Additional long-term growth initiatives for Iclusig include clinical trials designed to examine lower doses and improving the safety profile.
The analyst mentions pipeline candidate AP32788, a highly selective kinase inhibitor intended to treat a specific type of lung cancer. The company has commenced various trials for AP32788 and believes the drug could gain FDA approval by 2021. The analyst believes the compound represents a “promising longer-term growth driver for the company,” stating that “depending on the data generated, progress in this ultra-orphan indication could potentially occur more briskly.”
The analyst reiterates his Outperform rating on the company with a $10 price target.