Market Overview

Acceleron Pharma Rallies After Phase 3 MDS Data, But Goldman Sachs Still Isn't Buying

Share:
Acceleron Pharma Rallies After Phase 3 MDS Data, But Goldman Sachs Still Isn't Buying
Related XLRN
The Daily Biotech Pulse: MediciNova Gets Orphan-Drug Status, KemPharm To Offer Shares, Emergent Buys Vaccine Maker
The Daily Biotech Pulse: Exelixis Liver Cancer Drug On Track For European Approval, Medtronic Goes Shopping, Opiant Snags BARDA Funding

Acceleron Pharma Inc (NASDAQ: XLRN), a clinical-stage biopharmaceutical focused on the treatment of serious and rare diseases, saw its stock soar after reporting encouraging Phase 3 data. But investors who are aggressive on the stock may want to reconsider, according to Goldman Sachs.

The Analyst

Goldman Sachs' Terence Flynn upgraded Acceleron from Sell to Neutral with a price target lifted from $21 to $40.

The Thesis

Acceleron, along with its partner Celgene Corporation (NASDAQ: CELG), said Thursday its lead pipeline drug Luspatercept for myelodysplastic syndrome achieved the primary endpoint of red blood cell transfusion independence.

Flynn named the following reasons for investors to be incrementally optimistic on Acceleron: 

  • The likelihood of ultimate success for Luspatercept has increased from 75 percent to 90 percent, in Goldman Sachs' view.
  • The sell-side firm's peak Luspatercept estimate was lifted from $1.3 billion to $1.6 billion.
  • Goldman's peak revenue estimate for Acceleron rose from $300 to $360 million based on a 23-percent sales royalty. 
  • Expectations for a faster ramp in MDS.

Flynn's peak Luspatercept revenue model is unchanged from prior estimates and still falls below Celgene's guidance of more than $2 billion, the analyst said. Acceleron could expand the opportunity to RS-negative patients and front-line, but it would require a head-to-head superiority trial versus other therapies, Flynn said. It's difficult to predict at this point if Luspatercept boasts a superior profile, he said. 

Acceleron still faces a long-term risk from gene therapy-focused companies, especially if newly diagnosed patients are successfully treated with therapies from companies like bluebird bio Inc (NASDAQ: BLUE), which would lower the prevalence pool over time, according to Goldman Sachs. 

Price Action

Acceleron Pharma shares were rallying 40.94 percent Friday morning to $47.89. 

Related Links:

SMid-Cap Biotech: Barclays Downgrades Prothena, Upgrades Achillion

4 Biotech Stocks Initiated At Buy: Acceleron, Tesaro, Mirati, Fate

Latest Ratings for XLRN

DateFirmActionFromTo
Sep 2018PiperJaffrayUpgradesNeutralOverweight
Sep 2018Morgan StanleyAssumesEqual-Weight
Jul 2018Morgan StanleyDowngradesOverweightEqual-Weight

View More Analyst Ratings for XLRN
View the Latest Analyst Ratings

Posted-In: Goldman Sachs luspaterceptAnalyst Color Biotech Upgrades Price Target Analyst Ratings General Best of Benzinga

 

Related Articles (CELG + BLUE)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ETTXWedbushInitiates Coverage On19.0
WINGWedbushDowngrades0.0
BMYCitigroupDowngrades57.0
INTCNomuraUpgrades0.0
HRZNKeefe Bruyette & WoodsDowngrades10.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Jefferies Downgrades Tenet As It Approaches Full Health

Pursuing A Secure Retirement In The 21st Century