Pending Cystic Fibrosis Trial Data, PTC Therapeutics (PTCT) is Poised to Break Out

PTC Therapeutics Inc (NASDAQ:PTCT) jumped eight percent higher yesterday, rising $1.02 to hit $13.78 at the market close. The biotech company’s shares were also surging when it came to volume, with more than 2.5 million shares traded through the day – up from the stock’s average volume of about 800,000 shares per day.

During pre-market trading this morning, PTC is up about three percent.

The boost yesterday arrived on the heels of the announcement that Credit Suisse reiterated its 12-month price target for PTC, which is set at $25.00. The firm also maintained its rating as Outperform.

More importantly, Credit Suisse told investors that PTC could trade as high as $100.00 down the road. The firm bases this estimate (which calls for shares to trade between $80.00 and $100.00, specifically) on a scenario where the company’s Phase 3 cystic fibrosis (CF) trial is successful. If the trial is not successful, Credit Suisse says that PTC will trade in the $9.00 to $11.00 range.

“Risk/reward is very good due to low expectations,” said Credit Suisse’s Alethis Young. “Our near-term focus for shares is upcoming CF data in Q1 2017 readout where we think that investor expectations remain low.”

The analyst added that expectations for an ongoing Phase 3 program evaluating the drug are low, especially since the first late-stage trial did not meet the primary endpoint. According to Credit Suisse, ataluren for CF could generate about $575 million in worldwide sales for 2025. There are roughly 3,000 CF patients in the United States, and 6,000 patents with non-sense mutation (class I) based CF, for which ataluren is the only product being developed.

Last month, the company announced that the European Medicines Agency (EMA) renewed the conditional marketing authorization for ataluren as a treatment of non-sense mutation Duchenne Muscular Dystrophy (nmDMD) – after the Committee for Medicinal Products for Human Use (CHMP) recommended the renewal. The product can only be marketed to ambulatory patients over the age of five.

The decision means that PTC can officially market the drug, which is commercially referred to as Translarna, in all 28 member countries of the European Union (EU) and members of the European Economic Area – like Iceland, Norway, and Liechtenstein.

“This important regulatory milestone supports the continued growth of our sustainable ex-US business in both the European Union and countries that reference the authorization,” said PTC’s Chief Executive Officer, Stuart W. Peltz, Ph.D. “Duchenne is a rapidly progressive disease and physicians need access to medicines, like Translarna, that have the potential to slow the devastating progression of this disorder.”

As a specific requirement under the terms of the renewal, PTC will need to complete an additional trial of the product in nmDMD.

Also last month, the company’s Spinal Muscular Atrophy (SMA) therapy – tentatively named RG7916 – was granted orphan drug designation (ODD) by the US Food and Drug Administration (FDA). The drug is a collaborative effort with Roche (OTC:RHHBY) and the SMA Foundation (SMAF).

The drug is an orally-administered, small molecule splicing modifier that is currently being evaluated in two clinical trials – called SUNFISH and FIREFISH. SUNFISH is assessing RG7916 in patients diagnosed with childhood onset SMA, and FIREFISH is testing the product in infant onset SMA.

Tim is a contributing analyst for and specializes in equities trading and public offerings. He is a graduate of UCLA and began his career doing capital markets research for a top investment banking software provider.