Citi Downgrades PTC Therapeutics Following Major Setback

Citi's Joel Beatty downgraded the rating on PTC Therapeutics, Inc. PTCT from Buy to Neutral, while lowering the price target from $90 to $13.

The downgrade follows the company's announcement on February 23 that the FDA has refused to review the Translarna application in the treatment of Duchenne muscular dystrophy (DMD).

Beatty believes that due to this major setback, "the outlook for Translarna approval in the US looks poor," and that PTC Therapeutics would now need to "generate additional data before approval which could be expensive and risky."

In addition, pointing to the FDA's "critical tone" in the briefing documents for DMD agents etiplirsen and drisapersen, the analyst said the FDA appears to have set a high bar for approval, despite pressure from patient advocacy groups.

"We continue to believe that Translarna will remain on the market to treat nmDMD in Europe," Beatty stated, while adding that Translarna had received conditional approval in the continent, based on its Phase 2 results, which demonstrated positive benefits, albeit not significant.

The CHMP is expected to review its approval by mid-2016, although the analyst expects the approval to be maintained, given the Phase 3 ACT DMD results.

"Data from the ongoing ph3 ACT CF trial is expected in early '17, and we continue to see the potential for approval in both the US and Europe depending on the results from this trial," the Citi report added.