UPDATE: J.P. Morgan Initiates PTC Therapeutics at Overweight on Ataluren Potential

In a report published Monday, J.P. Morgan analyst Geoff Meacham initiated coverage on PTC Therapeutics PTCT with an Overweight rating and $20.00 price target.

In the report, J.P. Morgan noted, “We are initiating coverage of PTC Therapeutics (PTCT) with an Overweight rating and $20 Dec 2014 PT. PTC is focused on therapies for orphan genetic diseases with the most advanced compound being ataluren, currently in phase 3 development for Duchenne muscular dystrophy (DMD; data 1H15) and cystic fibrosis (CF; beginning second study 1H14). Notably, these are two ‘hot' orphan markets that each offers a robust opportunity. Of note, other companies are also developing agents for DMD and CF, but ataluren has no direct competitors given it specifically targets patients with nonsense mutations. We believe that insights gained in prior ataluren clinical studies maximize the probability for success in phase 3. While ataluren, which is unpartnered, has potential in both indications we conservatively include revenues only for DMD with peak WW sales of $700M, which could easily double should CF also be successful. Of note, ataluren could receive conditional approval in Europe for DMD in Nov '13, but we believe this is a lower probability and it is not assumed in our model. Given a high probability of success for ataluren in DMD, good optionality in CF, plus a free call option on EU approval in DMD in 4Q13, we're initiating coverage with an Overweight rating.”

PTC Therapeutics closed on Friday at $16.94.