Jefferies analyst Michael Yee says that despite the inclusion of a boxed warning highlighting the potential increased cardiovascular risk, Evenity is an incremental $500M-plus drug for Amgen. The analyst points out that Forteo did $1.5B despite a warning label for bone cancer. He keeps a Buy rating on Amgen with a $230 price target.
Wednesday, April 10, 2019
Alexion resumed with an Outperform at Raymond James
Raymond James analyst Steven Seedhouse resumed coverage of Alexion with an Outperform rating and $161 price target, citing what he sees as good visibility into continued growth as the company works to switch patients from Soliris to Ultomiris and pursues subcutaneous follow-on products to extend “existing, successful franchises.” He models upside even without any pipeline contributions, the analyst noted.
Biogen initiated at Raymond James
Biogen resumed with a Market Perform at Raymond James. Raymond James analyst Steven Seedhouse resumed coverage of Biogen with a Market Perform rating, stating that the company’s remaining business following the failure of aducanumab “appears a little fragile” and faces “existential risk” in some cases, such as the Tecfidera IPR decision due in 2020. Near-term pipeline readouts, including the nearest readouts on Vumerity and BIIB067, don’t seem high-impact enough to reverse sentiment, Seedhouse tells investors.
ICER draft report presents modest headwind for DBV, Aimmune, says Stifel
Stifel analyst Derek Archlia noted that ICER, an independent and non-partisan research organization that analyzes the benefits along with costs of treatments, issued a draft report assessing the value and effectiveness of Aimmune’s (AIMT) AR101 and DBV Technologies’ (DBVT) Viaskin peanut for peanut allergy. He believes ICER’s cost-effectiveness analysis re-affirms his cautious approach on the peanut immunotherapy category and believes the report presents a modest headwind for the stocks. However, this was only a draft report in which ICER made assumptions for costs since no official pricing has been announced for either therapy, Archlia noted. He maintains Hold ratings on both Aimmune and DBV Technologies.
SunTrust lowers price targets on CVS, raises price target on WellCare
SunTrust analyst David MacDonald lowered his price target on CVS (CVS) to $65 from $85 as part of his broader research note previewing Q1 results for the healthcare services stocks. The analyst expects the quarter to reflect the company’s challenges around reimbursement pressure, fewer generics, and lower brand inflation that should be a detriment to retail pharmacy and long-term-care businesses, even though he maintains a bullish view on the stock longer term based on its risk-reward profile. MacDonald also raises his price target on WellCare (WCG) to $340 from $305, saying his bullish expectation for the stock is driven by the company’s “strong core trends, high visibility, and superb win rate”. The analyst also cites the pending WellCare acquisition by Centene (CNC) yielding a “meaningful combined pharmacy opportunity and increased diversification” from an expanded “Medicaid footprint”.
Flexion slides after ‘unanticipated’ commercial executive change
Flexion is looking to replace Senior VP of Commercial Operations Dan Deardorf with a Chief Commercial Officer
Shares of Flexion (FLXN) are under pressure on Wednesday after the company’s CEO announced at an investor conference that it has parted ways with its Senior Vice President of Commercial Operations, a move Raymond James analyst Elliot Wilbur calls “completely unanticipated.” While Wells Fargo analyst David Maris acknowledged that the timing of the announcement is “less than ideal,” he believes that if things are not going well or even if they can be better, it “makes sense to bring in additional talent.”
‘COMPLETELY UNANTICIPATED’: Noting that Flexion’s CEO announced at an investor conference that the company has parted ways with its Senior VP of Commercial Operations Dan Deardorf and is looking to replace him with a Chief Commercial Officer, Raymond James’ Wilbur said that the news was “completely unanticipated” and there “will no doubt be a new round of jitters around the launch trajectory of Zilretta” following the announcement. Seeking to ease concerns, the company reiterated its annual revenue guidance of $65M-$80M, Wilbur noted. While the receipt of a dedicated J Code for Zilretta “certainly made the reimbursement process smoother” and is clearly a selling point from the salesforce’s perspective, the analyst pointed out that management recently indicated that it had underestimated the dynamics of payer and reimbursement hurdles at the individual practice level and how the evolution of larger practices had created more encumbrances to initial adoption based on individual practice payer and economic dynamics. Overall, Wilbur believes Zilretta has underperformed an optimistic set of external expectations that should not have been allowed to evolve in the first place, but it is “still early in the Zilretta launch phase and not too late to course correct.” Management and the board seem to have recognized this and made what was no doubt a tough call, he contended. Wilbur reiterated a Strong Buy rating on Flexion shares.
MAKES ‘SENSE’ TO BRING IN ADDED TALENT: After catching up with management briefly, Wells Fargo’s Maris noted that Flexion feels that it is leaving the “building the team mode” and/or initial launch mode and entering a marketing/focus-on-growth mode, and this may require additional senior management. From what the analyst can surmise, the company was not thrilled with 2018 Zilretta growth and is looking for ways to accelerate growth and uptake of Zilretta. Nonetheless, Maris noted that it is “clear from the stock reaction” that this is creating additional uncertainty with investors, especially since earlier this year the 2019 sales guidance fell below consensus. While the timing of the announcement is “less than ideal,” coming during a quiet period ahead of first quarter results, the analyst argued that if things are not going well or even if they can be better, “it makes sense to bring in additional talent.” Maris acknowledged his discomfort with the uncertainty the “unexpected” news brings, but thinks that at two times 2020 sales for a growing product, the shares represent a “compelling value” and believes Zilretta will be a growth product for the next several years. The analyst reiterated an Outperform rating and $26 price target on Flexion shares.
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