EPRX stock is undervalued, Raymond James says

Following new data from the company, Raymond James analyst Rahul Sarugaser has raised his price target on Eupraxia Pharmaceuticals (Eupraxia Pharmaceuticals Stock Quote, Chart, News, Analysts, Financials TSX:EPRX).

Victoria, BC-based Eupraxia’s lead product is EP-104IAR, is designed to meet what the company says is an unmet medical need to change the way knee pain is treated.

The analyst says the company’s most recent Phase 2 trial was outstanding.

“EPRX’s data from its Ph2 investigation of EP-104IAR in OA was, essentially, as strong as it could have been, showing clinically meaningful benefit over very long durations,” the analyst wrote. “Just as important, these data demonstrated to us that EPRX’s pipeline programs in conditions that benefit from the steady, long-term delivery of corticosteroids (e.g. fluticosone) are, indeed, also viable. EP-104IAR proved the formulation’s widely differentiated pharmacokinetics (capacity to deliver, essentially, zero-order drug release), should translate directly to EPRX’s Ph1a/2b program (EP-104GI) in EoE. What we’ve come to understand is that, while the OA data may read out spectacularly well (>24 week pain relief, bilateral dosing), we believe orthopedic docs may be more motivated toward knee replacement surgery than steroid injections as a long-term solution. This is not to say that EP-104IAR in OA couldn’t still be a (multi-)billion dollar product, but, for now, the market seems to be discounting this possibility until it sees widespread adoption. EoE, in contrast, is vastly underserved (see above), and thus benefits from low-competition, strong-pricing + reimbursement environment. Should EP-104GI clear the FDA and price appropriately, we expect GI docs to be quite motivated to deliver medication amid their routine scoping workflow among EoE patients.”

In a research update to clients September 25, Sarugaser maintained his “Strong Buy 1” rating on EPRX but raised his one-year price target from $17.00 to $18.00. The stock closed Friday, September 22 at $7.20.