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Shire Pharmaceuticals stock faces new Roche threat

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If you have been holding Shire Pharmaceuticals stock since June you will be feeling under the weather, having watched the share price drift ever lower from a high of over 5 to the current price of 36. It has not been a particularly pleasant trip for Shire stock holders, but despite heavy selling activity in the London Stock Exchange-listed shares this week, there could be something of a turnaround in the offing.



City of London broker Liberum Capital has issued a buy call on Shire Pharmaceuticals stock, largely because they think it is now too cheap. Liberum is saying that anything under 35 is cheap territory for Shire Pharmaceuticals stock, and has set a target price of 42. This seems to have been enough to set off the spate of buying this week. The question is, will all this optimism prove to be well-founded, or just a flash in the pan? Over 70% of brokers tracked by website Broker Forecasts are in agreement with Liberum.

Roche: the fly in the ointment for Shire Pharmaceuticals stock

Some 25% of Shire’s revenue comes from haemophilia treatments, but there have been worries in the market that a new treatment being developed by Roche could take the wind out of Shire’s sails. Trial data for the new Roche drug is expected by year end and could be pivotal. This risk has not gone away.

In particular, yesterday Roche scored approval from the US Food and Drugs Administration for its emicizumab drug, with analysts in the US projecting potential sales for Roche of as much as USD 5 billion. This is three months ahead of its PDUFA date – the usual deadline for the FDA to approve new drugs, which demonstrates that the regulator is happy. Roche has said already the new drug, to be called Hemlibra, will reduce the rate of treated bleeds by 87%.

The Armchair Trader says:

If you are a fan of Shire Pharmaceuticals stock, be aware that many investors see Shire in a two horse race with Roche to develop the next generation haemophilia blockbuster drug. There are big, big worries that Roche will steal Shire’s breakfast. While Liberum has injected a positive note into the debate, all eyes are on Roche really. Juliana Dierks, the head of haemotology treatments at Shire, was talking tough yesterday when she told Reuters that she is looking forward to seeing more data from Roche, but the FDA has likely had a very good look at Hemlibra already and seems happy. If it was down to us, we would not rush into Shire pharmaceutical stock just yet.

 

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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