By Roger Nachman
Created 12/06/2010
J.P. Morgan Chase & Co. has an Overweight rating and a $38 price target on Human Genome Sciences (NASDAQ: HGSI [1]).
In a note sent to clients, J.P. Morgan writes, "We believe some investors were anticipating this development given the brief 3-week window (and a holiday-shortened 3 weeks at that) between the 11/16 AdCom and the 12/9 PDUFA. This gave the FDA little time to digest the feedback from the AdCom, process additional information submitted to the agency by HGSI/GSK following
the panel, and finalize the drug's label. While not the most optimal outcome (which obviously would have been outright approval on 12/9), we believe this is the next best thing as we now believe the risk of a Complete Response Letter (which may have been inevitable without this delay and could have pushed a decision all the way into 3Q11) is far less likely, while the likelihood of a first cycle approval are significantly higher. Moreover, we suspect the removal of this overhang could prompt some investors currently on the sidelines to enter the story given the now mitigated risk into year-end. Bottom line, we are actually relieved by this development despite the modest drop in HGSI shares in initial after hours trading. We view any weakness as a very attractive opportunity."
Shares of HGSI gained 61 cents on Friday to close at $25.60.
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