UPDATE: JMP Securities Reiterates On Hyperion Therapeutics Inc As Diabetes Program Is Discarded

In a report published Tuesday, JMP Securities analyst Liisa A. Bayko reiterated a Market Outperform rating on Hyperion Therapeutics Inc (NASDAQ: HPTX), but lowered the price target from $40.00 to $35.00.

In the report, JMP Securities noted, “Following a discovery of fraudulent activity concerning the analysis of the Phase 3 study for DiaPep277 in patients with newly diagnosed Type 1 diabetes, Hyperion has decided to terminate Phase 3 development. We think this is a wise decision and commend the company for an unequivocal decision.

"Recall, Hyperion had acquired Israel-based Andromeda Biotech in June for the DiaPep277 asset. While the finding is unfortunate, there is limited impact to our model given the relatively modest assumptions we have had for the program, and feedback from investors in recent months suggested a lack of confidence in its prospects. As a result of this news, we bring our price target down to $35 based on a risk-adjusted discounted cash flow analysis, and we view Monday's weakness in the stock as a buying opportunity ahead of the company's upcoming analyst day on September 30, where we anticipate an update on the clinical development plan for its only product, Ravicti, in hepatic encephalopathy (HE), and we are hoping for good news that the long-awaited Phase 3 study can commence by 1Q15.”

Hyperion Therapeutics closed on Monday at $25.92.