Myovant Shares Soar on $4.2 Billion Development Collaboration with Pfizer; Target Price $42

Switzerland-based biopharmaceutical company Myovant Sciences’ shares soared after it announced a collaboration with Pfizer to jointly develop and commercialize relugolix for advanced prostate cancer and relugolix combination tablet for women’s health in the U.S. and Canada.

Following this announcement, Myovant Sciences shares soared as high as 35% to an all-time high of $30.89 on Monday but erased some of those gains on Tuesday. However, the stock is up about 18% so far this week and up nearly 75% so far in 2020.

Myovant will receive up to $4.2 billion, including an upfront payment of $650 million, $200 million in potential regulatory milestones for U.S. Food and Drug Administration approvals for relugolix combination tablet in women’s health, and tiered sales milestones upon reaching certain thresholds up to $2.5 billion in net sales for prostate cancer and also for the combined women’s health indications, the company said in the statement.

If Pfizer exercises the option to commercialize relugolix in oncology outside of the U.S. and Canada, excluding certain Asian countries, Myovant will receive $50 million and be entitled to receive double-digit royalties on sales.

Analyst Comments

“We are pleased that Myovant has found a capable partner ahead of relugolix’s launches. By drawing on Pfizer’s commercial strength in prostate cancer and women’s health, relugolix will be better positioned to rapidly penetrate these competitive markets. We expect that the greater reach and frequency of interactions with physicians now possible through Pfizer’s existing networks will create greater demand for relugolix in the near-term, and allow it to compete with ABBV more effectively over the long haul,” said Phil Nadeau, equity analyst at Cowen and Company.

“We find the deal terms attractive: up to $4.2 billion in upfront and milestone payments, as well as a 50/50 profit and cost split. The upfront payment will help fortify MYOV’s balance sheet and the 50/50 profit and cost split will allow MYOV to more aggressively invest in relugolix’s launch, while still maintaining substantial economics on the franchise,” Nadeau added.

Myovant Sciences Price Forecast

Six analysts who offered stock ratings for Myovant Sciences in the last three months forecast the average price in 12 months at $32.00 with a high forecast of $42.00 and a low forecast of $30.00. The average price target represents an 18.30% increase from the last price of $27.05. From those six equity analysts, five rated “Buy”, one rated “Hold” and none rated “Sell”, according to Tipranks.

Several other analysts have also recently commented on the stock. JP Morgan raised the target price to $38 from $30. Baird upped the stock price forecast to $30 from $24 and gave an “outperform” rating on the stock. SVB Leerink increased the price objective to $30 from $28. ValuEngine upgraded to a “buy” rating from a “hold”. Zacks Investment Research lowered to a “sell” rating from a “hold”.

We think it is good to buy at the current level and target $42 as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong buying opportunity.