Hyperion Gets Coverage From Two Analysts This Morning: $15 Target

Hyperion Therapeutics (NASDAQ:HPTX) received two Buy ratings this morning after going public in late July. Both Cowen and Needham initiated coverage on HPTX, with Needham assigning a $15 price target to the stock.While the investment banks publishing the reports sponsored the IPO – no surprise on the coverage and ratings – this company looks interesting and could be a Buy for new investors since the post-IPO performance risk played out and there are key catalysts approaching.  Notably, the IPO priced at $10 a share, just below its intended range of $11-$13 a share, but HPTX has held up pretty well, closing at $10.04 on Friday. The company is developing treatments for orphan diseases and its lead product, Ravicti, is undergoing FDA review for potential approval as a treatment for the long-term management of ammonia levels in patients with a urea cycle disorder (UCD). For the UCD indication, Cowen estimates that Ravicti will start generating revenues next year, if approved, and could achieve over $100 million in sales by 2016. HPTX is a unique biotech IPO in that it could generate revenues and potentially profits within a year of going public.  The FDA will decide whether to approve Ravicti on its October 23rd PDUFA date, and if that decision is positive, shares of HPTX could rise considerably. Ravicti is also under development for another rare condition called hepatic encephalopathy (HE). Analysts estimate that this add-on use, if approved, could enable Ravicti to generate an additional $300 million in annual sales.  Hyperion is expected to meet with the FDA by year-end to determine the clinical trials needed to develop the HE indication. (more…)