Alpha Cognition has target trimmed by Raymond James

Investment bankers Raymond James delivered a recent update on its coverage of Vancouver-based biotech company Alpha Cognition (Alpha Cognition Stock Quote, Charts, News, Analysts, Financials TSXV:ACOG), with analyst Rahul Sarugaser maintaining his conviction on the potential of ACOG’s Alzheimer’s drug, currently in clinical trials, and reiterating an “Outperform 2” rating on the stock.

Alpha Cognition released in June positive results from a bioequivalence study for its candidate ALPHA-1062 with the standard of care glantamine hydrobromide, with no adverse events reported among patients treated. 

More recently, the company released its second quarter 2022 results on August 25, prompting Sarugaser’s new report, which was published on August 31. ACOG reported a net loss for the Q2 of $3.4 million or $0.05 per share compared to net income of $0.1 million or $0.00 per share a year earlier. The company’s cash and equivalents at the end of the second quarter stood at $6.0 million.

ACOG provided some operational updates with its quarterly release, on the one hand, saying that it had conducted an additional study to demonstrate pharmacokinetic equivalence between a 5 mg dose of ALPHA-1062 delayed release tablets and 8mg of galantamine hydrobromide extended release (ER) capsules. 

On the new results, Sarugaser said, “In our view, these data strengthen the package ACOG will use to support its NDA filing for ALPHA-1062 in mild-to-moderate Alzheimer’s disease, anticipated in 2Q23.”

On the other hand, Alpha Cognition’s update also said it’s readying the RESOLVE tolerability study for the safety and tolerability versus placebo for ALPHA-1062, another step which the company aims will help in its FDA New Drug Application (NDA), with Sarugaser adding that the tolerability study will likely bolster eventual adoption of the drug and increase peak sales.

“The objectives of the RESOLVE trial are to evaluate the tolerability profile of ALPHA-1062, and the potential for a faster titration in patients with Alzheimer’s disease. Additionally, the Company has initiated a number of cost saving initiatives to extend cash runway and is exploring both partnership and other opportunities,” said CEO Michael McFadden in a press release.

Adding to the picture, however, ACOG also added that it will be, “seeking additional capital to fund this study initiation and will commence the study within a quarter to securing the required funding.”

As a result, Sarugaser updated his model on ACOG, assuming a $7 million equity raise at $0.50 per share plus half a warrant per share, which in turn has impacted his target price, moving it from $4.00 to $3.00.

“While we do trim our target price today, we remain—assuming the company succeeds in raising its required capital—very optimistic about ACOG’s prospects with respect to the RESOLVE trial, and its anticipated NDA submission in 2Q23, so maintain our Outperform rating,” Sarugaser wrote.

At press time, Sarugaser’s new $3.00 target represented a projected 12-month return of 383.9 per cent.