NervGen Pharma price target chopped at Research Capital

Research Capital analyst Andre Uddin lowered his target price for NervGen Pharma (NervGen Pharma Stock Quote, Chart, News, Analysts, Financials TSXV:NGEN) to $7.70 from $12.00 in an Aug. 26 report while maintaining a “Speculative Buy” rating, citing a more conservative valuation approach despite continued optimism about its lead drug candidate.

Vancouver-based NervGen is developing NVG-291, a peptide drug for the treatment of spinal cord injury.

For the second quarter, the company reported no revenue, in line with expectations and unchanged from last year. The net loss was $9.1-million, or $0.10 per share, compared with Uddin’s forecast of a $4.9-million loss, or $0.05 per share, and a loss of $7.8-million, or $0.08 per share, a year earlier. NervGen ended the quarter with $15.7-million in cash and no long-term debt. Including potential proceeds from warrant and option exercises, Uddin said the company should have sufficient runway into 2027.

He reiterated that NVG-291 represents a “compelling blockbuster opportunity” addressing a substantial unmet need in spinal cord injury, with encouraging efficacy signals seen in the chronic patient cohort of its ongoing trial. Additional analyses from the chronic cohort and top-line results from the subacute cohort are expected in the near future.

Uddin noted that while he expected the stock to rally on the chronic cohort data, shares declined instead.

“We very much remain optimistic about the outlook for NVG-291,” he said. “However, in the interest of maintaining a conservative stance until additional data becomes available, we have applied a higher discount rate in our NPV valuation, raising it from 35% to 45%.”

At $7.70, his revised target represents a 110 per cent premium to the current share price.

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