New trial data has Echelon Wealth Partners analyst Doug Loe raising his price target on Vancouver-based Arbutus Biopharma (Arbutus Biopharma Stock Quote, Chart, News: Nasdaq:ABUS).
On September 20, Arbutus reported that its long-standing, U.S.-based partner Alnylam Pharmaceuticals announced that the APOLLO Phase 3 study of patisiran, an investigational RNAi therapeutic being developed for patients with hereditary ATTR amyloidosis with polyneuropathy, met its primary efficacy endpoint and all secondary endpoints. The company noted that Patisiran is enabled by Arbutus’ lipid nanoparticle (LNP) technology. Arbutus management said the program represents the most clinically advanced application of Arbutus proprietary LNP delivery technology, and added that, according to the terms of the LNP license agreement for patisiran, Arbutus will be owed single digit royalties on sales of patisiran.
“We are very pleased by the successful outcome of Alnylam’s APOLLO Phase 3 study of patisiran,” said CEO Mark J. Murray. “This is an important achievement for patients and for the field of RNAi therapeutics. These data provide further validation of the utility of our leading LNP technology. Our LNP technology represents the most proven delivery technology for the systemic delivery of nucleic acid-based therapeutics.”
Loe says there is strong evidence from Alnylam’s APOLLO Trial that LNP-siRNA can be disease altering, not just gene expression altering. The analyst Thursday increased his target price on Arbutus Biopharma and explained his reasoning.
“We are maintaining our Speculative BUY rating on ABUS, while increasing our one-year PT to US$12.25, mostly from reducing discount rates embedded in our valuation as indicated above, but also from modest parallel refinements to our model as shown within our note,” the analyst says. “We now base our EBITDA/EPS valuation methodologies on our F2023 forecasts, the year in which we expect royalty revenues for ARB-1467 and other siRNA-LNP formulations to achieve initial commercial traction (we project F2023 EBITDA/fully-taxed EPS of US$155.7M/US$1.87). On the milestone watch, we are looking for an update on Phase II ARB-1467 chronic hepatitis B surface antigen knockdown (data from final cohort expected this month, in fact) and for initial Phase I data from capsid inhibitor drug ARB-423 to be available in FQ417. We assume that a Phase II combination therapy hepatitis B trial combining ARB-1467 with already-approved drugs tenofovir (Gilead’s (GILD-Q, NR) Viread) and PEGylated interferon (Merck/Schering’s PEG-Intron) to also commence before end-of-year. With ALN-TTR02 Phase III data now showing that LNP-delivered siRNAs can confer tangible clinical benefit in at least one indication, and are not just biochemical curiosities that knock down genes in clinically irrelevant ways, we believe that Arbutus’ raison d’etre is firmly established in mainstream clinical medicine.”
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