Canadian biotech name Eupraxia Pharmaceuticals (Eupraxia Pharmaceuticals Stock Quote, Charts, News, Analysts, Financials TSX:EPRX) just announced a new Phase 2 clinical program, which should be good news for interested investors. That’s according to Raymond James analyst Rahul Sarugaser, who reviewed the new development in a Monday report where he reiterated an “Outperform” rating on the stock while lifting his target price by $2.00 to $9.00 per share. At press time, the new target represented a projected one-year return of 192 per cent.
Victoria, BC’s Eupraxia is a clinical stage biotechnology company working on the development of extended-release therapeutic candidates, including lead candidate EP-104IAR for the treatment of osteoarthritis of the knee. The company announced on October 12 the initiation of a Phase 2 trial of EP-104IAR in adult patients afflicted with eosinophilic esophagitis (EoE) or chronic inflammation of the esophagus, a rare disease that restricts the ability to swallow food.
“The Company believes its drug delivery technology platform has the potential to be effective in EoE based on the proven efficacy of oral immediate release fluticasone propionate in this indication, and the growing library of data supporting the value of extended-release steroids in a variety of indications,” said Eupraxia in a press release.
“The Company’s technology is underpinned by a novel polymer membrane designed to release drug at a pre-defined rate, which could result in an effective, sustained treatment for EoE, improving patient outcomes,” Eupraxia said.
Looking at the new clinical program, Sarugaser said the current prevalence of EoE in the United States and Western Europe is about 42.2 cases per 100,000 people, putting the US population at about 150,000 cases. As a result, he is conservatively valuing the opportunity at $109 million, leading to his increased target price.
Sarugaser said EoE is broadly known to be an underdiagnosed condition, making Eupraxia focus on it a relatively high-value orphan indication for it to pursue.
“To date, there is only one FDA-cleared drug for treatment of EoE: Sanofi’s (SAN-EPA) dupilimab (Dupixent)—priced at ~US$88k/yr—which generated €1.96 bln across 5 indications in 2Q22 (how much was driven by EoE, specifically, is unclear). Sanofi management expects dupilimab to hit peak annual sales of €10 billion. Other off-label forms of treatment for EoE in the U.S. include oral corticosteroids and proton pump inhibitors,” Sarugaser wrote.
Altogether, Sarugaser estimated the risk-adjusted Net Present Value (rNPV) of the EoE asset to Eupraxia at $108.9 million and climbing to about $833 million at the completion of a Phase 3 trial and then escalating again to about $2.1 billion upon FDA clearance.
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