This analyst loves Eupraxia Pharmaceuticals

Leede Financial has initiated coverage of Eupraxia Pharmaceuticals (Eupraxia Pharmaceuticals Stock Quote, Chart, News, Analysts, Financials NASDAQ:EPRX), assigning a “Buy” rating and a US $11.00 target price.

Analyst Douglas Loe said the Victoria, B.C.-based biotechnology company’s proprietary drug-delivery platform positions it to “innovate meaningfully in autoimmune and inflammatory disease markets,” led by late-stage programs in osteoarthritis and eosinophilic esophagitis.

Eupraxia’s technology, DiffuSphere, combines a crystalline active pharmaceutical ingredient core with a semi-permeable polymer shell, enabling localized, zero-order drug release designed to provide durable therapeutic exposure while minimizing systemic concentration spikes.

Its lead candidates, EP-104IAR for knee osteoarthritis pain and EP-104GI for EoE, are reformulated crystalline versions of fluticasone propionate using a patented polyvinyl alcohol (PVA) encapsulation process.

Loe said Phase II data for both assets “de-risks” the Phase III pathway and underpins his valuation.

His target is based on a blend of NPV analysis, using a 25% discount rate, and forward multiple methodology applied to forecast 2031 results. He projects combined royalty revenue of US$159.8-million in 2031, producing Adjusted EBITDA of US$137.7-million, or US$1.27 per share, driven primarily by EP-104GI’s commercialization in the U.S. EoE market.

He expects EP-104GI to finish Phase III testing and seek U.S. approval in 2028, with a U.S. launch in 2029 that could deliver about US$39.7-million in first-year royalty revenue. A European launch is forecast for 2030. For EP-104IAR, Loe assumes Phase III completion and a filing in 2029, with a U.S. launch in 2030 that could generate roughly US$8.4-million in initial royalty revenue through a commercial partner.

“Our valuation is heavily weighted toward EoE clinical success,” Loe noted, adding that platform value beyond these two assets offers upside not captured in the target.

Loe said Eupraxia should generate Adjusted EBITDA of negative US $25.4-million in fiscal 2025 (moving to negative $24.0-million by 2028), turning positive at $6.9-million in 2029 and rising to $308.9-million by 2033, on revenue ramping from $39.7-million in 2029 to $343.5-million in 2033.

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