Biotech Investors: Chiasma Was Just Called One Of The Most 'Compelling Fresh Ideas' In Pharma

In a report published Monday, Barclays analyst Douglas D. Tsao initiated coverage of

with an Overweight rating and a price target of $40, saying that the company was among "the most compelling "fresh" ideas in spec pharma" in view of the opportunity for "its lead asset, oral octreotide capsule (OOC), and the patented Transient Permeability Enhancer (TPE) technology platform which should yield further pipeline candidates." Tsao estimated revenues to exceed $321M for oral octreotide in acromegaly, while expecting potential franchise revenues to cross the $1.1B mark, based on additional indications. "We anticipate OOC launch in 2016 for the treatment of acromegaly; we expect strong adoption based OOC's improved "tolerability" and symptom control." Chiasma is expected to begin trials for the use of OOC in the treatment of Neuroendocrine Tumors, or NETs, as well as another orphan indication, which could be for Cushing's disease. Tsao said that the addition of these indications could add incremental revenues of $789M and $21M, respectively. In the report Barclays noted, "CHMA's TPE technology offers opportunity to create novel oral therapies from approved injectable drugs. There is no shortage of candidates in which the TPE technology can be applied…CHMA expects to disclose its first follow-on product candidate in late '16. Coming soon on the heels of expected OOC approval, we see the rapid transformation from a single-product story to one with multiple drivers."