Mizuho Securities initiated coverage of Wave Life Sciences (NASDAQ:WVE) with a “buy” rating and price target of $34. The stock closed at $17.50 on August 16.
Analyst Salim Syed writes that Wave is an idea-rich, nucleic acid therapeutics company that is relatively early in its story. “While our 12-to-18 month price target of $34 already represents a significant upside from where the stock currently trades, we believe that Wave stock offers multi-bag potential over the next three-to-five years,” he added.
“Nucleic acid therapeutics is a burgeoning area in biotech,” he said, adding that only five drugs have been approved to date, by his count. “While the road has been bumpy, we want to point out that [the next few years] have the potential to be the cusp in the nucleic acid therapeutics space,” he added.
Mr. Syed’s report focuses on four areas: Wave’s IP, Huntington’s Disease (HD), Duchenne Muscular Dystrophy (DMD), and other considerations.
On IP, he said Wave is claiming stereopurity, a key differentiator between it and its competitors. “While questions will remain and we believe litigation will likely occur at some point in the future, we believe Wave is on the right track to protecting its claims and assets,” he added.
On HD, Mr. Syed said he is encouraged by the company’s preclinical data to date and believe that Wave’s allele-specific targeting approach could help differentiate it from its peers and help position it in the marketplace. “We assign Wave’s HD drug candidates, which have recently entered Phase 1b/2a trials, a 20% probability of success,” he added.
On DMD, he has given Wave’s exon 51 skipping candidate, which is expected to enter the clinic before year-end 2017, a 30% probability of success.
