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NervGen Pharma is a triple, says iA Capital

Advances in clinical trials should move the needle big time on biopharm company NervGen Pharma (NervGen Pharma Stock Quote, Chart, News, Financials TSXV:NGEN), according to Chelsea Stellick of iA Capital Markets. In an update to clients on Monday, Stellick reiterated her “Speculative Buy” rating and target price of $6.00/share, which at press time represented a projected one-year return of 200 per cent.

Incorporated in 2017 and headquartered in Vancouver, NervGen Pharma is a clinical stage biotech company that discovers and develops treatments for patients suffering from medical conditions related to nerve damage; its lead candidate, NVG-291, is a clinical stage asset being developed for spinal cord injury, multiple sclerosis and Alzheimer’s disease.

Stellick’s latest analysis comes after NervGen released its fourth quarter financial results along with 2021 year-end results.

The quarterly numbers were headlined by cash burn of $8.3 million, slightly more than the $6.3 million in cash burn the company reported in the same quarter of 2020. NervGen also reported general and administrative expenses of $1.6 million, up from the $1.1 million reported in the same quarter of 2020 on account of increased corporate costs and stock-based compensation.

Meanwhile, the company’s research and development expenses came in at $2.5 million for the quarter, a 23 per cent decrease compared to the $3.3 million reported in the final quarter of 2020, and having been consecutively higher over the previous three quarters primarily due to expanding preclinical studies, clinical trial costs, and placebo formulation and development. All told, the company ended 2021 with $16.9 million in cash.

On its clinical progress, the company said the first multiple ascending dose (MAD) cohort of five subjects for its NVG-291 offering has been dosed and that no serious adverse events have been reported to date.

Stellick believes the second dose cohort will be dosed in the coming weeks, with every increase in MAD dose level, which requires two weeks of treatment, providing an opportunity to further de-risk NVG-291 as a practicable therapeutic for humans and serving as a catalyst for NervGen’s positive momentum in 2022 ahead of the start of bridging cohorts.

“We also continue to benefit from the expertise of our Clinical Advisory Boards for Alzheimer’s disease, multiple sclerosis and spinal cord injury (SCI),” said Paul Brennan, President and CEO of NervGen in the company’s February 28 press release. “Our ability to attract such top tier scientific and clinical experts says volumes about the underlying science as well as the significant potential of our therapeutic platform in treating damage to the central nervous system. Additionally, the two financings that we closed during the fourth quarter have strengthened our balance sheet and provided important funding for the continued development of NVG-291.”

The company got off to a strong start in 2022, as it announced a memorandum of understanding with Shirley Ryan AbilityLab, the top ranked Physical Medicine & Rehabilitation hospital in the United States, to conduct a Phase 1b/2a trial of NVG-291 in acute/subacute and chronic spinal cord injury (SCI) patients.

Shirley Ryan AbilityLab will conduct the placebo-controlled trial using advanced electrophysiology to

assess neuronal pathways and behavioural outcomes, with the high volume of spinal cord injury patients treated there ensuring rapid enrollment and enabling top-line data to be released early in 2023.

With probability adjustments in play, Stellick is not projecting revenue for the company in any of NVG-291’s intended usage points until 2027, with $106.6 million in potential revenue coming from spinal cord injury treatments, which account for over 90 per cent of the revenue projections in 2028 ($412.6 million out of a projected $446 million total), 2029 ($357.6 million out of a projected $504 million total) and 2030 ($315.4 million out of a projected $586 million total), with revenue from Alzheimer’s disease treatments becoming more pronounced in 2029 ($102.4 million) and 2030 ($188.8 million).

2027 is also when Stellick projects the company’s net income to turn positive at $22 million, with projected growth as high as $349 million by 2030.

Overall, Stellick believes NervGen continues to make positive progress.

“As we reflect on 2021 as the year NVG-291 and NGEN entered the clinic, we also expect 2022 to be another transformative year as NGEN completes Phase 1 and embarks on Phase 1b in AD and SCI and Phase 2 in MS. NGEN’s cash position of $17 million will be enough to initiate its Phase 1b/2 trials,” Stellick said. “We are impressed with the progress NGEN has made thus far and look forward to completion of the Phase 1 trial and initiation of new clinical trials in 2022.”

“We believe safety, tolerability and dosing data in the next year as well as the initiation of Phase 1b and Phase 2 trials will enable the share price to reach our $6.00/share target in one year,” she said.

NervGen’s share price has dropped by 6.4 per cent over the last 12 months, though investors who bought in to start 2022 have seen a 24.5 per cent loss. NervGen began climbing after hitting a 52-week low of $1.30/share on May 31, eventually getting to a high of $3.14/share on November 15.

About The Author /

Geordie Carragher is a staff writer for Cantech Letter
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