Eupraxia Pharma has more upside, says Raymond James

Raymond James analyst Rahul Sarugaser has been singing the praises of biotech company Eupraxia Pharmaceuticals (Eupraxia Pharmaceuticals (Stock Quote, Charts, News, Analysts, Financials TSX:EPRX) for a while now, and although investors who caught on early enough have now been supremely rewarded for their astute judgment, Sarugaser says there’s still time for others to climb aboard, as Eupraxia is about to deliver data from two important clinical trials.

Eupraxia is a Victoria, BC-based company focused on locally-delivered, extended release therapeutics, including lead clinical candidate EP0194IAR, in development for osteoarthritis (OA) and for eosinophilic esophagitis (EoE).

EPRX was down around a dollar per share as recently as last August, but the stock has shot up a couple of times, first to $4 as of this past November and then to around the $7 mark as of this past month.

Sarugaser sees further upside. In a Thursday update to clients, the analyst reiterated a “Strong Buy” rating on Eupraxia and 12-month target price of $11.00, which at press time represented a projected one-year return of 57 per cent. 

Currently in Phase 2 trials for both OA and EoE, Eupraxia announced recently that it had evaluated the last patient from its 300-patient clinical trial for OA, with management saying it was confident that topline data will show a meaningful reduction in OA knee pain and corresponding improvement in functioning over an extended duration.

Sarugaser said he expects that topline data to be announced before the end of June.

Secondly, on EoE, Eupraxia announced on Thursday that it has started dosing patients in its Phase 1b/2a 15-patient open-label clinical trial in EoE. Sarugaser said that the company has taken its time in finding patients for this trial but that the fact that EoE is an orphan indication with less than 200,000 patients in the US makes the delay more understandable. The analyst now expects data from this trial to be available toward the end of the third quarter or early fourth quarter 2023.

“Given EP-104IAR’s mode of action in OA—slow release of a well-known steroid (fluticasone) to ameliorate inflammation—is identical to that in EoE (ameliorating inflammation in the esophageal mucosa), a positive read-out from the Ph2 OA trial would, in our view, de-risk the readout of the EoE trial coming just a couple of months hence. This further consolidates our growing confidence, and supports our re-rating to Strong Buy,” Sarugaser wrote.