William Blair initiated coverage at “outperform” of four biotech companies that are strategically positioned to benefit from the hepatitis B virus frontier.
“Curing chronic hepatitis B infections is the next frontier after solving the hepatitis C problem, and the markets for both disease cures could be similar in size, reaching $200-billion each in cumulative global sales over a span of two decades,” writes analyst Katherine Xu.
“Existing therapies can effectively control the virus and slow disease progression, but cannot eradicate or cure the chronic infection, which eventually leads to liver transplant or cancer and death,” she added.
Ms. Xu pointed out that the hepatitis B virus is more complex than the hepatitis C virus (HCV) because it can “exist inside the nucleus of the liver cells in the form of covalently closed circular (cccDNA) mini-chromosome, which is much harder to eliminate than HCV, an RNA virus, and the immune suppression of the host by HBV is also much more pronounced.”
William Blair started Arrowhead Pharmaceuticals (NASDAQ:ARWR) with a $9 price target. The stock closed at $7.06 on Thursday.
Ms. Xu said Arrowhead has pioneered the understanding of employing RNAi agents against HBV, and multiple-dose, proof-of-concept data will be released over the next 12 months.
For Arbutus Biopharma (NASDAQ:ABUS), William Blair set a price target of $7 for the stock, which closed at $3.72 on Thursday.
Ms. Xu said Arbutus boasts perhaps the broadest pipeline, encompassing seven different mechanisms against HBV, and the “ambition is to create curing combinations in-house, with insights not attainable by others with thinner pipelines.”
William Blair initiated coverage of Assembly Biosciences (NASDAQ:ASMB) with a price target of $16. The stock finished at $6.02 on Thursday.
Ms. Xu said Assembly focuses on the HBV core protein, a pleiotropic player involved in multiple steps of the viral life cycle. “We believe a strong core modifier will be an essential component in a curing regimen,” she added. Clinical testing of the first candidate is expected to begin before year-end, with proof-of-concept data in 2017.
William Blair launched coverage of Spring Bank Pharmaceuticals (NASDAQ:SBPH) with a $26 price target. The stock closed at $11.02 on Thursday.
Spring Bank is developing SB 9200, a selective, oral, interferon-inducing agent in a Phase 2 study, with proof-of-concept data starting to flow around the end of this year. Ms. Xu said SB 9200 is poised to become an immune backbone in a curing regimen.
“The four stocks have a current combined market cap of under $800-million and are on the brink of significant value creation driven by the upcoming proof-of-concept data,” she added.
