Analyst: Acceleron's Blood Disorder Candidate Luspatercept Has Blockbuster Potential

Acceleron Pharma Inc (NASDAQ: XLRN) has a rich pipeline that positions the stock for additional upside, according to Piper Jaffray.

The Analyst

Analyst Danielle Brill upgraded Acceleron from Neutral to Overweight and increased the price target from $52 to $75, suggesting roughly 45-percent upside from current levels.

The Thesis

The commercial opportunity for Acceleron's luspatercept in de-risked indications such as transfusion-dependent beta-thalaseemia, or TDT, and second-line treatment of myelodysplastic syndrome, or MDS, is over $2 billion, Brill said in a Monday note. (See her track record here.)

BLA submission for both indications is planned for the first half of 2019, the analyst said. 

The pipeline candidate is a $4-billion-plus, opportunity if it can be successfully developed as first-line treatment for MDS, non-TDT and myelofibrosis, Brill said. 

Luspatercept royalties could fetch the company $680 million in 2028, the analyst said. 

"We think the high profit margin associated with the royalty stream is currently underappreciated by the street and believe XLRN shares are undervalued." 

Full Luspatercept Phase 3 data presentations for second-line MDS/TDT at the ASH in December and the Phase 2 MF data due in the second half of 2019 are upcoming catalysts that could drive the stock meaningfully higher, Brill said. 

Luspatercept royalties comes with high margins, as Celgene Corporation (NASDAQ: CELG) is responsible for full commercialization and development costs, the analyst said. 

Acceleron's sotatercept is being evaluated as a disease-modifying agent for pulmonary arterial hypertension and could also be a blockbuster drug, Brill said.

The company is also evaluating its neuromuscular agents ACE-083 and ACE-2494 in Phase 2 and Phase 1 trials, respectively.

The Price Action

Acceleron shares were rallying 3.66 percent to $53.83 at the time of publication Tuesday. 

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