Jefferies downgrades Hikma on generic Advair delays

Hikma Pharmaceuticals was under pressure on Wednesday as Jefferies downgraded the stock to 'underperform' from 'buy' and slashed the price target to 1,450p from 2,162p.

Jefferies pointed to delays to the US Food and Drug Administration's approval of its generic Advair Diskus asthma treatment. It said that while Hikma hasn’t completely ruled out approval this year, this is unlikely.

"We believe the delay could be until 2H 2018 at the earliest assuming three months to get an FDA meeting, six months to put together a resubmission package and six months for a class 2 review; however if another trial is needed we estimate it could add six to nine months." Hikma could provide further details at the first-quarter update this week, but Jefferies reckons there will be a "sizeable consensus downgrade" with any updated guidance.

In addition, the bank said the delay limits the commercial potential before other entrants potentially enter the market.

"Although Hikma stated at FY that it expects to launch five new products by end June, we would like to see sales pick up before potentially turning more constructive," it said.

Earlier this month, Hikma and Vectura said they had received a 'complete response letter' from the FDA and that as a result it saw a "low likelihood of approval this year".

"Hikma is committed to bringing this important product to the US market and will work collaboratively with the FDA to address their outstanding questions," the company said at the time.

At 0928 BST, the shares were down 2.8% to 1,716.71p.