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Pharmacyclics, Inc. Message Board

  • effenberg effenberg Jan 15, 2013 1:28 PM Flag

    Credit Suisse

    Clear Leader in a Multibillion-Dollar Drug
    ■ We Are Initiating Coverage with an Outperform Rating and a $79 Target
    Price: We believe that PCYC is the most derisked and investible pure play
    in the emerging oral lymphoma/leukemia drug class with blockbuster
    potential. The biggest remaining question is how large the could market be.
    We believe that experience with Revlimid and Gleevec provide strong
    evidence that worldwide markets likely exceed $5B, and ibrutinib is
    positioned to be both first-in-class and best-in-class in key market segments.
    ■ Catalysts: There are no high-risk clinical events in 2013. Key updates of
    Phase II data are expected at ASCO (June) and ASH (Dec). The latest
    update had 96% of first-line CLL patients progression free at 26 months with
    single-agent ibrutinib. With longer follow-up, we expect greater appreciation
    of the market potential; longer duration equals greater sales opportunity.
    ■ Risks: We believe that clinical and regulatory risks are low. The primary
    risks include (1) uncertain timing to a variety of market launches, and
    (2) emerging competition from Gilead, Infinity, Celgene, and Roche. We
    would buy on any volatility around these issues, as the we believe that time
    to market is not the most critical variable, and new drugs will likely grow the
    markets.
    ■ Valuation: Our $79 target price for PCYC is supported by a sales multiple
    analysis and DCF model. Both are primarily driven off the nearly completely
    derisked CLL indication. Long treatment duration is the primary driver in both
    the first-line elderly and relapsed/refractory settings. We estimate 2020
    ibrutinib worldwide sales of ~$3.5B.

    Sentiment: Strong Buy

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