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BMO Capital: Five Prime Therapeutics Still A Buy, Worth $31/Share Now

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In a report published Thursday, BMO Capital analyst Jim Birchenough reiterated an Outperform rating on Five Prime Therapeutics Inc (NASDAQ: FPRX), with a $31 price target.

The company, along with bluebird bio, Inc. (NASDAQ: BLUE), announced after market close on Wednesday that "the two companies have entered into an exclusive license agreement for developing and commercializing chimeric antigen receptor (CAR) T cell therapies using FPRX's proprietary human antibodies to an undisclosed cancer target for hematologic malignancies and solid tumors," the BMO Capital report said.

According to the agreement, bluebird bio would be responsible for funding and conducting the clinical development, while also taking care of the regulatory and commercial requirements. Five Prime, on the other hand, would receive $1.5 million as upfront payment and would be eligible for milestone payments, which the analyst estimates to be more than $130 million per licensed product. Five Prime would also get tiered royalties based on product sales.

"With apparent interest in the program from other CAR-T companies, we believe that FPRX has selected an optimal partner in BLUE, given its expertise in gene therapy underlying CAR-T design," Birchenough said.

Although details of the deal have not yet been disclosed, the analyst expects the royalties to be in the mid- to high-single-digit range.

"With multiple high-value collaborations in immuno-oncology and beyond, we see significant upside potential to FPRX shares over the next 12-18 months," Birchenough added.

Latest Ratings for FPRX

DateFirmActionFromTo
Mar 2017Cowen & Co.Initiates Coverage OnOutperform
Mar 2017NomuraInitiates Coverage OnBuy
Oct 2016CitigroupInitiates Coverage OnBuy

View More Analyst Ratings for FPRX
View the Latest Analyst Ratings

Posted-In: BMO Capital Jim BirchenoughAnalyst Color Reiteration Analyst Ratings

 

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