Chimerix Downgraded At Morgan Stanley, More Upside May Be Elsewhere Firm Warns

• Chimerix Inc CMRX shares are up 9 percent year-to-date, despite having lost 16 percent since September 8.
• Morgan Stanley’s Matthew Harrison downgraded the rating on the company from Overweight to Equal-weight, while reducing the price target from $56 to $50.
• While key data expected in 2016 may boost the company’s share price, there seems to be less upside versus peers, Harrison said.

Key data from the CMV study of brincidovir, Chimerix's antiviral agent, is expected in early 2016. Analyst Matthew Harrison expects the company’s shares to appreciate into yearend. He added, however, that the delay in the adenovirus filing and consensus already expecting strong SUPPRESS data, “we think the risk-reward is skewed more negatively into SUPPRESS.”

Harrison mentioned that the new price target of $50 assumes approval and launch in CMV, Adenovirus and solid organ transplant. Brincidovir is expected to generate around $30,000 per annum, assuming about $1,500 per dose, two doses per week, and 10 weeks of therapy.

“While our model could generate more upside if we increase our brinci pricing, we believe investors will see more risk in a thesis predicated only on a higher priced drug or higher annual price increases. Thus, we believe a modest launch price is appropriate to model,” the Morgan Stanley report noted.

Although there is no news related to M&A, Harrison considers Chimerix as an attractive single-agent company “that needs to build out a worldwide commercial infrastructure.” This makes the company attractive for a larger pharma firm “looking to expand its hospital-based products,” he explained.

Harrison concluded that there is “more potential upside elsewhere in our coverage,” adding that the positive news related to CMV was mostly “factored in,” due to which Chimerix shares had “more limited upside versus peers.”