Eupraxia Pharmaceuticals is undervalued, Research Capital says

Following results that have sent the stock northward, Research Capital analyst Andre Uddin remains bullish on Eupraxia Pharmaceuticals (Eupraxia Pharmaceuticals Stock Quote, Chart, News, Analysts, Financials TSX:EPRX).

On February 25, EPRX announced what it described as positive data from its RESOLVE Phase 1b/2a Trial of EP-104GI for Treatment of Eosinophilic Esophagitis.

“In the RESOLVE trial, positive efficacy and safety outcomes continue to be observed,” said CEO Dr. James Helliwell said. “We believe the positive dose-response data from these first six cohorts clearly demonstrate that precise, localized delivery of EP-104GI at higher doses is leading to further improvements in both tissue health and symptom reductions. Also, no serious adverse events nor events of oral or gastrointestinal candidiasis, commonly seen in EOE patients being treated with steroids, have been observed in any of the first six Cohorts.”

Uddin summarized the development.

“Today, EPRX announced topline results (3 patients) from cohort 6 (64mg) in the ongoing Phase 1a/2b eosinophilic esophagitis (EoE) trial (NCT05608681),” he wrote. “EoE is an inflammatory condition where white blood cells accumulate in the esophagus, leading to pain and difficulty swallowing food. The RESOLVE trial is a Phase 1b/2a, multi-center, openlabel, dose-escalation study that is evaluating EP-104GI across multiple EoE patient cohorts assessing several endpoints, including SDI, impact on tissue health (histology) as measured by EoEHSS, and the measurement of peak eosinophil count (“PEC”). Each patient in cohort 6 received 16 injections of 4 mg EP-104GI (total dose: 64 mg) targeting the lower three-quarters of the esophagus. EP-104GI generated a continuing dose response in histology scores (EoEHSS) grade and stage scores, as well as, peak eosinophil count (PEC) from four biopsy sites (see Figure 1 below). All three patients reported reduced symptom severity as measured by Straumann Dysphagia Index (SDI) which was reduced by up to 5 points or 71% from baseline at peak, and by an average of 3 points or 46% from baseline at week 12. So far, the drug’s patient-reported symptom score is comparable to Sanofi’s Dupixent (-48% reduction) or Takeda’s Eohilia (-43% reduction), which require weekly or bi-weekly injection (Dupixent) or twice daily oral ingestion (Eohilia). However, Eupraxia’s EP-104GI should be far superior for patient compliance – once patients are injected there is no further action required for weeks to months. We maintain our view that EP-104GI could possibly outcompete Dupixent, Eohilia, and other candidates in development if EP-104GI continues to generate strong data. There are three more cohorts: Cohort 7 (72mg), Cohort 8 (96mg), and Cohort 9 (120mg).We expect potential partners to continue to watch these data readouts. If the final data works well, it is probable a decent partnership could be forged. We continue to closely monitor the readouts from the RESOLVE trial. The data so far appears promising, and we have yet to incorporate the potential impact of Eosinophilic Esophagitis (EoE) into our valuation model.”

In a research update to clients February 25, the analyst maintained his “Speculative Buy” rating and price target of $8.25 on EPRX, implying a return of 54.8% at the time of publication.