Leerink starts Puma Biotech at MP; PT $21

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Leerink launched coverage of Puma Biotechnology (NASDAQ:PBYI) with a “market perform” rating and $21 price target. The stock closed at $25.33 on Jan. 16.

Puma is a single-product commercial-stage biotech company, marketing Nerlynx for the treatment of HER2+ breast cancer.

“In the near-term, we see Puma shares trading based on the outlook for Nerlynx revenue in its currently approved indication: extended adjuvant therapy after adjuvant Herceptin, and prospects for uptake in a near-term expansion indication, metastatic breast cancer,” writes analyst Thomas Smith.

He said results in the third quarter of 2018 were disappointing, further deflating investor sentiment as sales growth slowed and the number of company-reported active patients on therapy was revised lower.

“Even with low expectations, we see multiple challenges for Nerlynx in its current indication, where a changing standard of care in the adjuvant setting is likely to pressure the size of the Nerlynx addressable opportunity, as well as the near-term expansion potential into HER2+ metastatic breast cancer, which is a market of limited size with growing competition,” he added.

However, Mr. Smith said the stock is trading “in-line with our below-consensus estimates and at current levels we cannot rule out strategic interest, given the resurgence in oncology-focused M&A and scarcity of commercial-stage oncology assets.”

Michelle Carr