Barclays Sees 40% Upside In Versartis Over Next Year

Barclays’ Geoff Meacham expects Versartis Inc (NASDAQ: VSAR) to report “pivotal phase 3 data of somavaratan in pediatric growth hormone deficient (GHD) patients by September 2017.”

The analyst initiated coverage of the company with an Overweight rating and price target of $28.

Promising Pipeline Candidate

Meacham mentioned that Versartis is focused on developing a long acting recombinant human growth hormone (rhGH), somavaratan, for use in both pediatric and adult patients, although the development of the former indication is more advanced at present.

If the Phase 3 data proves positive, it could lay the foundation for the regulatory filings for the drug in the U.S. and the E.U.

“While the rhGH market is crowded, we believe that if shown to be non-inferior to standard of care, somavaratan could take significant share in a $1B pediatric market in the US and EU – given what we view as a better potential product profile,” the analyst explained.

Related Link: Versartis Announces Data on Long-Acting Somavaratan for Growth Hormone Deficiency to be Featured in Late-Breaker Presentation at ENDO 2017

Near Term Upside

Meacham believes that somavaratan also has the potential to grow in the adult GHD market, since most adults don't begin therapy due to the burden of current treatments.

The analyst estimates peak end-user sales across indications and territories for somavaratan at over $700 million.

“Given what we view as an attractive clinical profile and commercial opportunity for somavaratan, we see near-term upside for VSAR shares,” Meacham stated.