Morgan Stanley sees 80% upside for anti-smoking drugmaker Achieve Life Sciences

Morgan Stanley has initiated coverage of small-cap biotech Achieve Life Sciences with an “overweight” rating, citing the potential of its experimental smoking- and vaping-cessation drug. The bank estimates that the treatment could generate more than $1 billion in sales. Achieve stock jumped more than 8% following the call.  

On Thursday, Morgan Stanley initiated coverage of Achieve with an “overweight” rating, Seeking Alpha reported. The bank set a target price of $13 per share, implying more than 79% upside from Thursday’s close. The stock gained 8.4% that day.

Morgan Stanley is upbeat about the prospects for Achieve’s experimental cytisinicline-based smoking-cessation treatment, even though the U.S. Food and Drug Administration’s has rejected approval of the drug, writes Seeking Alpha.

The FDA issued its decision in June. Its concerns related to incomplete product labeling and deficiencies at the third-party facility where the company had intended to manufacture the drug, Achieve stated. The regulator did not identify any deficiencies regarding cytisinicline’s efficacy or safety, the company emphasized. Achieve intends to resubmit another application in the fourth quarter and potentially receive approval in the first half of 2027.

Morgan Stanley stated that cytisinicline is already established as a treatment for nicotine dependence in Central and Eastern Europe. Bulgarian company Sopharma has marketed it there for more than two decades. The U.S. biotech has signed several agreements with Sopharma under which, among other things, it purchases raw materials from the company.

Morgan Stanley stated that it views cytisinicline as clinically de-risked in smoking cessation. The bank estimates that its potential sales in the smoking-cessation market could reach around $760 million by 2039. Cytisinicline sales for nicotine e-cigarette cessation could generate around $330 million more, according to Morgan Stanley estimates.

Clinical trials for this indication are still underway, but the FDA has granted the program Breakthrough Therapy designation, which should accelerate the approval process.

Achieve stock has 11 ratings from Wall Street analysts, all of them "buy." The average target price is $13.83 per share, implying 91% upside from Thursday’s close.

After the FDA issued its Complete Response Letter for cytisinicline, H.C. Wainwright and Canaccord Genuity reiterated their “buy” ratings on Achieve, underscoring the FDA’s decision was unrelated to the drug’s safety.

Shortly beforehand, Raymond James resumed coverage of the biotech and set a target price of $20 per share, one of the highest on Wall Street. That implies around 180% upside from the last close.