BioTuesdays

Stifel cuts Deciphera Pharma to hold; PT to $10 from $60

Deciphera Pharma

Stifel downgraded Deciphera Pharmaceuticals (NASDAQ:DCPH) to “hold” from “buy” and slashed its price target to $10 from $60 after the failure of the company’s Qinlock in 2L gastrointestinal stromal tumor (GIST). 

Shares of Deciphera dropped $27.18, to close at $8.82, on heavier than normal volume of more than 33 million shares on Oct. 5.

Analyst Bradley Canino writes that after the approximate 75% selloff on Oct. 5, “we admit there could be a bounce in the stock” as investors contemplate the value of about $325-million in cash exiting 2021, a potential $200-million a year drug in Qinlock, two Phase 3-ready pipeline drugs, and an interesting Phase 1 oncology drug. 

However, “we struggle to suggest new long-term capital should be put to work immediately in Deciphera for two primary reasons,” he said.

First, “we believe all three pipeline assets have sufficient debate and skepticism around them that might prevent the market from supporting the R&D spend with only Qinlock 4L GIST sales in the P&L,” he noted.

Second, “we do not yet have visibility into how management is considering portfolio prioritization, cost adjustments, and potential strategic transactions for these assets in order to unlock value,” Mr Canino said.

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