Ladenburg ups Arcturus Therapeutics to buy; PT $22

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Ladenburg Thalmann upgraded Arcturus Therapeutics (NASDAQ:ARCT) to “buy” from “neutral” with a $22 price target after the company resolved a management dispute, “removing an organizational overhang since early February.” The stock closed at $5.92 on May 31.

Under the accord, Arcturus appointed four new independent directors, accepted the resignation of four existing directors and mutually terminated all pending litigation with co-founder and former CEO, Joseph Payne. Mr. Payne and another co-founder, Padmanabh Chivukula, were reinstated as CEO, and CSO and COO, respectively.

“We believe the company can now focus on its normal operation to advance its LUNAR and UNA platforms, internal RNA therapeutics pipelines and multiple partnerships,” writes analyst Wangzhi Li. “We see Arcturus’ LUNAR platform and RNA therapeutics pipeline as highly attractive and competitive in the rising RNA medicine space.”

Trading at a market cap of about $65-million, with about $40-million in cash, “we see Arcturus as currently undervalued,” as its current $25-million enterprise value is around 3% of the average $850-million enterprise value of the other 10 comparable public RNA medicine companies, Mr. Li added.

“We believe Arcturus presents an attractive investment opportunity in the rising RNA medicine field and a rare publicly traded company available for investing in the burgeoning mRNA therapy space,” he said. “Given the organizational dispute and litigation overhang are now settled, we see the company as back on track with great upside potential.”

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