Shire Could Have A Game Changer In The Making

BTIG’s Timothy Chiang believes 2017 will be a year filled with volume-growing companies in focus.

Chiang maintains a Buy rating on Shire PLC (ADR) SHPG, with a price target of $242.

Superior Product

The analyst believes outperformance in 2017 could be driven by “management team execution in an increasingly tough environment where drug prices will remain under scrutiny,” while pointing out that Shire’s Xiidra, a treatment for dry eye, is “as an example of a strong new product launch.”

The rapid adoption of Xiidra among new patient has been driven by the drug’s superior profile and potentially better tolerability, as compared to the most commonly prescribed treatment, Restasis.

“In addition, by 2Q17 we expect Shire to show top line results for SHP643 (for the treatment of HAE), which if positive, could be a potential ‘game changing’ treatment for patients who suffer from this debilitating, rare, orphan disease,” Chiang mentioned.

Better Positioned

Although the pharma/biotech sector is likely to encounter a more challenging environment in 2017, the analyst believes that Shire is likely to be better positioned to cope with pricing headwinds, as visibility into the company’s pipeline improves.

“In just 3 months on the US market, we estimate Xiidra’s sales run rate is already approaching $200 million, which suggests the potential for upside to our CY16 – CY20 sales estimates of $30 million, $225 million, $425 million, $575 million, and $750 million, respectively,” Chiang added.