PTC stock recovered its steep losses Friday after European regulators voted to withdraw the biotech company's treatment for a severe form of muscular dystrophy.
Late Thursday, the Committee for Medicinal Products for Human Use issued a negative opinion of PTC Therapeutics' Translarna. Translarna treats Duchenne muscular dystrophy, an inherited neuromuscular disease. The negative opinion means PTC will likely have to pull Translarna from the market in the next few months.
RBC Capital Markets analyst Brian Abrahams says the decision was already baked into PTC stock. The initial negative opinion regarding Translarna's benefits and risks came in September. PTC asked the committee to reevaluate its decision, which it confirmed on Thursday.
In early trading on today's stock market, PTC stock toppled as much as 5.9%. Shares briefly fell below their 50-day moving average for the first time since mid-November, according to MarketSmith.com. But, at the close, PTC stock rose 1.5% to 27.05, sitting on a floor at its 50-day line.
PTC Stock Recovers From Translarna Decision
Europe accounts for roughly half of Translarna's sales, Abrahams said in a report to clients. Further, the drug is not approved in the U.S. He sees a low 25% chance the Food and Drug Administration signs off on the DMD treatment.
"Putting it all together, we now see annual DMD revenue declining to about $160 million from $610 million in 2023," Abrahams said.
PTC will have to lean on its experimental pipeline to get over this hurdle, he said.
The company is testing a treatment for phenylketonuria, a genetic disease in which the body can't process an amino acid called phenylalanine. Patients must limit foods with phenylalanine. The buildup of phenylalanine, which is found mostly in protein, can cause cognitive disability and other health problems in these patients, according to the Mayo Clinic.
Further down in its pipeline, PTC is also studying a Huntington's disease treatment.
RBC's Abrahams kept his sector perform rating on PTC stock, but cut his price target to 22 from 27.
What's Next For PTC?
Abrahams noted PTC's Emflaza, another DMD treatment, is soon to lose patent protection. The company is also prepping for the launch of its phenylketonuria drug, sepiapterin, and has about $290 million in debt due in several years.
"We believe PTC will need to generate second-quarter data that maintains the promise of (Huntington's disease treatment) PTC518, find a smoother regulatory path for sepiapterin after an initial delay and generate a solid initial sepiapterin launch in order to reignite investor enthusiasm and raise capital," he said.
PTC stock hit a recent high at 59.84 in May. But shares have fallen more than 55% since then, as of Thursday's close.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
