Cormark ups Transition price target 52%

Cormark Securities raised its target price on “buy-rated” Transition Therapeutics (TSX:TTH; NASDAQ:TTHI) to $8 from $5.25, saying it believes Irish partner Elan is likely to move Transition’s ELND005 drug forward into a Phase 3 clinical trial in Alzheimer’s disease.  The stock closed at $3.50 on the TSX Friday.

An imbalance of deaths in an ongoing Phase 2 trial caused Elan and Transition to stop dosing with the two highest dose groups in December, but continued the trial with patients receiving the lowest dose.

“We believe that the risk of safety issues interfering with the ongoing Phase 2 trial have passed and also that the efficacy hurdle to move forward is low,” writes analyst David Dean.  “Based upon the limited information available about the deaths, and the fact that the FDA did not halt the trial, we believe that it is unlikely that the deaths were related to ELND005 (but that risk remains),” he added.

Pointing to Elan’s pipeline, Mr. Dean notes that without the Transition drug, “Elan’s future prospects appear to be materially decreased. Absent ELND005, we believe that Elan’s ability to hit another home run is significantly reduced.”