Global Blood Therapeutics' (GBT) GBT440 Has Potential for Peak Sales of $2.7B, Says Wells Fargo; Analyst Initiates Coverage at 'Outperform'

(Updated - September 30, 2016 10:58 AM EDT)

Wells Fargo initiated coverage on Global Blood Therapeutics (NASDAQ: GBT) with an Outperform rating and a price target of $71-$81. Analyst Jim Birchenough said his positive view is based on outlook for successful phase 3 development and commercialization of Sickle Cell Disease treatment GBT440, which is seen as a best-in-class hemoglobin modifier with estimated peak sales of $2.7 billion. Birchenough also pointed out that GBT has multiple potential value drivers beyond the phase 3 trial that could support upside potential for the stock.

"With phase 2 data demonstrating a hemoglobin modification rate of 17-27%, a 1.1 g/dL mean increase in hemoglobin (up to 2 g/dL), 21% decrease in reticulocyte count, and bilirubin reduction of 37.5%, we believe that a clinically relevant benefit has already been described for GBT440 and should translate into reduction in vaso-occlusive crisis (VOC)," said Birchenough.

The analyst continued, "With VOC as a potential primary endpoint in phase 3 and a definite determinant of commercial success, we believe that prior data for extracorporeal hemoglobin modification with sodium cyanate in the Diederich study demonstrating 77% reduction in VOC, absent VOC in SCD patients with hereditary persistence of fetal hemoglobin (HPFH) and anti-sickling fetal hemoglobin (HbF) of 10-30%, and absolute absence of VOC in any GBT440treated patient on-study to date, all support a high likelihood of VOC benefit and phase 3 success."

Wells Fargo's $71-$81 per share valuation range is based on probability adjusted NPV for GBT440 assuming $2.7 billion in peak sales, and 60%-65% likelihood of success.

For an analyst ratings summary and ratings history on Global Blood Therapeutics click here. For more ratings news on Global Blood Therapeutics click here.

Shares of Global Blood Therapeutics closed at $20.46 yesterday.

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