The Street Might Be Discounting A Potential Blockbuster Drug From Acceleron

• Acceleron Pharma Inc XLRN shares have plunged 23 percent since December 21.
• Credit Suisse’s Kennen MacKay initiated coverage of the company with an Outperform rating and a price target of $50.
• The Street is less bullish about luspatercept due to competition from gene therapy, MacKay stated.

Analsyt Kennen MacKay believes that luspatercept has the potential to become a blockbuster drug, which could be a long-term treatment for beta-thal and MDS patients. He added, however, that the Street seems to be discounting the drug’s value due to potential competition from gene therapy in beta-thal.

Acceleron’s beta-thal phase 3 strategy “has been refined through lessons learned” from the phase 2 experience. This, together with recent gene therapy setbacks, supports peak sales estimate of $1 Bn, MacKay commented. He added that there could be an additional $1 Bn for RS+ MDS in which luspatercept exhibited the highest responses in phase 2.

In the report Credit Suisse noted, “Dalantercept + axitinib showed promising early ORR, PFS, and OS data in refractory RCC, nearly doubling PFS over SoC. We see potential for ~$900M in peak RCC sales…We also see this program as overlooked given its early-stage development, but we note the potential for rapid approval given the severity and lack of treatment options for refractory RCC patients.”