PTC stock hit a nine-month high Monday after the European Commission decided against pulling its drug, Translarna, from the market.
Translarna has a conditional approval in Europe to treat patients with a muscle-wasting disease known as Duchenne muscular dystrophy, or DMD. Twice — in September and January — the Committee for Medicinal Products for Human Use issued a negative opinion on the PTC Therapeutics drug.
But following what PTC previously called "tremendous outcry from the patient and physician community," the European Commission has asked its committee to reexamine its opinion. And, so, "Translarna lives to fight another day," Leerink Partners analyst Joseph Schwartz said in a report to clients.
It's rare for the European Commission to not adopt its committee's opinion, RBC Capital Markets analyst Brian Abrahams said in a client note. The news Monday increases the chances Translarna remains on the market in Europe and other jurisdictions, he said. But U.S. approval is still a wild card.
"We believe the recent delay in EC action had made this outcome increasingly likely," he said. We "view this as a positive development, as it should improve cash flows, reduce capital raise needs and increase floor valuation into (Huntington's disease) data and (phenylketonuria) launch."
On today's stock market, PTC stock rocketed 21.2% to 40.12. Shares launched into a profit-taking zone after breaking out of a cup base with a buy point at 32.91 earlier this month, according to MarketSurge.
PTC Stock: Precedent Is Promising
Following the European Commission's decision, PTC Therapeutics paused its guidance for 2024. The firm said it can't accurately forecast whether Translarna will remain on the market in Europe.
But RBC's Abrahams says precedent suggests it will. The European Commission and CHMP had a similar back-and-forth over Uniqure's now defunct gene therapy, Glybera. Glybera stayed on the market in Europe until Uniqure withdrew it due to commercial struggles in 2017.
Abrahams kept his sector perform rating on PTC stock, but raised his price target to 39 from 29.
He says the European Commission's decision wasn't a surprise given appeals from patients and doctors. Schwartz, the Leerink analyst, offered a similar view.
"We generally see the European Medicines Agency as less easily influenced by patient advocacy groups than the Food and Drug Administration, but as we have noted in the past, DMD patient groups and DMD parents have a great deal of influence and shouldn't be discounted in the drug review and approval process," he said.
He retained his market perform rating on PTC stock.
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