Jefferies analyst Andrew Tsai downgraded the rating on Deciphera Pharmaceuticals (DCPH – Research Report) to a Hold today, setting a price target of $25.60.
Andrew Tsai has given his Hold rating due to a combination of factors surrounding Deciphera Pharmaceuticals’s acquisition and future business prospects. The acquisition by Ono Pharmaceutical for $25.60 per share in cash, which totals an equity value of $2.4 billion, is expected to close by the third quarter of 2024. This acquisition reflects a multiple of 3-4 times on a projected $600-800 million franchise value for Deciphera’s two core assets, Qinlock and vimseltinib, both of which are well-established in terms of de-risking. Tsai’s analysis suggests that there were likely minimal to no competing bids for Deciphera, which may have impacted the Hold rating. Additionally, the deal points to a belief in synergies between Ono’s broad cancer pipeline and Deciphera’s offerings, without significant overlap.
Tsai also points to the potential for incremental news flow rather than binary outcomes in the near term for Deciphera. This includes anticipated regulatory filings and data presentations for Qinlock and vimseltinib. Qinlock is expected to continue its sales growth, bolstered by factors such as increased therapy duration, market expansion in the EU, and possible future FDA approvals that could further drive sales. On the other hand, vimseltinib’s differentiation in treating TGCT rare tumors and its superior safety profile compared to competitors could provide an advantage in the market. Despite these positive notes, the Hold rating may reflect a balanced view of the risks and benefits post-acquisition, along with the consideration of the stock price already reflecting the acquisition terms.
In another report released today, Piper Sandler also downgraded the stock to a Hold with a $25.60 price target.
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Deciphera Pharmaceuticals (DCPH) Company Description:
Deciphera Pharmaceuticals, Inc. operates as a biotechnology company which develops and manufactures kinase inhibitor treatments for cancer by cutting off the ability of tumor cells to thrive and spread. The company designs a drug candidate, DCC-2618, to inhibit the full spectrum of mutant or amplified KIT and PDGFRa kinases that drive cancers such as gastrointestinal stromal tumors (GIST), advanced systemic mastocytosis (ASM), gliomas, and other solid tumors. It also develops two other clinical-stage drug candidates, DCC-3014 and rebastinib, as immuno-oncology kinase, inhibitors targeting the kinases CSF1R, and TIE2 kinas. The company was founded by Peter A. Petillo and Daniel L. Flynn in November 2003 and is headquartered in Waltham, MA.
