By finding new uses for existing drugs, Revive Therapeutics (TSXV:RVV) is well positioned in a pharmaceutical industry that is facing a “significant patent cliff”, says Beacon Securities analyst Doug Cooper.
In a research report to clients Monday, Cooper initiated coverage of Revive Therapeutics with a “Buy” rating and a one-year price target of $2.00, which at the time of publication implied a return of 344.4%.
Cooper points out that, to date, Revive has secured the IP for two drugs it intends to repurpose, one for gout and the other for Rett’s Syndrome. Noting that these initial markets combined represent potential peak sales of more than $800-million, Cooper says a catalyst for Revive will happen when they complete Phase Two trials, something he expects will happen in the next 12 months.
The pharmaceutical industry, notes Cooper, is facing down a steep falloff in sales. Between 2013 and 2019, he says, more than $115-billion in annual sales will lose their patent protection. What’s more, drug companies face a more stringent, time consuming and costly path to develop new drugs. He cites one study that says it now takes more than $800-million and up to 17 years to commercialize a drug.
Cooper believes Revive’s business model has obvious advantages that play well against the weaknesses of the pharma industry. He says there is less risk to what the company is doing because repurposed drugs do not have safety issues, a major reason drugs do not receive FDA approval. On top of that, repurposed drugs are cheaper to develop and boast a much shorter time to partnership or commercialization.
“At a current market capitalization of $7.4 million, we believe the shares offer tremendous upside potential,” says Cooper. “…the shares of Revive are significantly undervalued versus other drug development companies at a similar stage.”
At press time, shares of Revive Therapeutics were up 4% to $0.52.
Disclosure: Revive Therapeutics is an annual sponsor of Cantech Letter.