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NICE Recommendations Means Sky's the Limit for PTC Threapeutics

Oppenheimer said the recent recommendation from NICE for Translarna is a "turning point" for PTC Therapeutics, Inc.  shares, as it bodes well for the upcoming CHMP review.

The Importance Of Translarna To PTC

On Friday, shares of PTC Therapeutics surged more than 40 percent after it announced that the National Institute for Health and Care Excellence (NICE) has recommended Translarna for nonsense mutation Duchenne muscular dystrophy (nmDMD) in England.

Duchenne muscular dystrophy (DMD) is a muscular disorder caused by the lack of dystrophin protein, which is key to the stability of skeletal, diaphragm and heart muscles.

"Specifically, recognition of the 'most sensitive group' and the acceptance of the loss-of-ambulation data from Phase-3 ACT-DMD trial bodes well for upcoming CHMP discussions, in our view. We note the NICE recommendation is valid for Translarna with conditional or full approval," analyst Christopher Marai wrote in a note to clients.

Although the analyst expects positive recommendation from CHMP (Committee for Medicinal Products for Human Use), he said PTC may still sell Translarna on named patient basis if the EMA (European Medicines Agency) removes conditional approval.

In addition, Marai noted that the NICE recommendation puts an end to pricing debate and verifies subset populations are scientifically valid and useful in determining drug benefit in DMD.

Since pricing debate comes to an end, the analyst stated that weight-based dosing may result in particularly attractive upside to current pricing, which stands at £220K/year based on 24–26kg.

"Translarna is delivered in 3 doses totaling 40mg/kg per day. Standard NICE discount in our view is ~15 percent, PTCT's agreement will remain confidential," Marai highlighted.

The analyst, who spoke with PTC management, noted that PTCT's financial guidance assumed this success and remains unchanged at $65 million–$85 million for 2016, while consensus revenue estimate stands at $67.64 million.

"Fully accounting for Ex-US sales, PTCT could be worth $60–80/share (6–8x multiple on conservative ex-US sales of $350 million, undiscounted)," added Marai who has an Outperform rating on the stock.

Shares of PTC declined Monday, after its 40 percent surge on Friday, on a possible profit taking move from investors. In early afternoon trading, the stock fell 7.96 percent to $8.21.

Read more: benzinga.com