Citi Starts PTC Therapeutics At Buy, Sees One Of Year's Biggest Binary Events Coming

• Shares of PTC Therapeutics, Inc. PTCT have declined more than 36 percent year-to-date.
• Citi’s Joel Beatty initiated coverage of PTC Therapeutics with a Buy rating and price target of $90.
• Beatty believes that investors are overly skeptical of the changes of success for Translarna, although complete success of the Phase 3 trial could take the share price up to $124.

“We see favorable risk/reward heading into this large binary event based on supportive scientific data and potential readthrough into other indications if results are positive,” analyst Joel Beatty elaborated, while mentioning that the company’s current European sales and PTC Therapeutics’ strong cash position are likely to limit downside risk to the stock.

According to the Citi report, “the ph3 ACT DMD trial results of Translarna for the treatment of a subset of Duchenne Muscular Dystrophy patients as one of biotech’s biggest binary events of the year,” with complete success of the trial having the potential to drive the share price as high as $124.

Beatty believes that there is a 60 percent probability of Translarna being approved in the US, given that scientific evidence supports “a) the benefits of enriching ACT-DMD based on age and ambulatory status, b) the interaction with tobiramycin, and c) the lack of efficacy in the 80mg/kd/day arm in the previous trial.”

Since Translarna helps with the readthrough of nonsense mutations, which could lead to several types of rare diseases, if the product is successful in ACT DMD, it is also likely to be effective in other ailments caused by such mutations, such as cystic fibrosis.