William Blair initiated coverage of PTC Therapeutics (NASDAQ:PTCT) with a “market perform” rating, citing a possibly tough road ahead for approval of the company’s ataluren in the U.S. The stock closed at $17.72 on Aug. 22.
Ataluren is in clinical development for the treatment of Duchenne muscular dystrophy caused by a nonsense mutation (nmDMD). Ataluren is approved within the European Union Member States, Iceland, Liechtenstein, Norway, Israel and South Korea under the trade name Translarna for the treatment of nmDMD in ambulatory patients aged five years and older.
“We believe that sentiment has risen for ataluren ahead of its advisory committee and PDUFA date after the FDA has shown leniency for other rare disease therapies (such as Amicus’s migalastat),” writes analyst Raju Prasad. “However, we urge caution in making this correlation.”
Looking solely at the data content, “we believe the FDA will likely highlight an incomplete dystrophin analysis and several post-hoc tests that indicate a potential (but unconfirmed) benefit in a subset of patients within the totality of PTC's data and, in turn, request another study,” he added.
Mr. Prasad said that in his model, he assigns a 10% probability of success to ataluren based on what he believes the FDA’s position will be.
“If ataluren receives a complete response letter, we see the potential for a 10% to 15% decline from current levels,” he said. “We note that if PTC has a positive advisory committee and ataluren is approved in the U.S., the shares could increase 80% to 100%. Our current estimates yield a fair value for PTC Therapeutics of $17 a share.”