Global Blood Therapeutics' (GBT) GBT440 Has Potential for Peak Sales of $2.7B, Says Wells Fargo; Analyst Initiates Coverage at 'Outperform'
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(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.
Shares of Global Blood Therapeutics closed at $20.46 yesterday.
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