Stifel initiated coverage of Ra Pharmaceuticals (NASDAQ:RARX) with a “buy” rating and $55 price target. The stock closed at $19.87 on Feb. 7.
Ra Pharma uses a proprietary peptide chemistry platform to develop therapeutics for the treatment of serious diseases that are caused by excessive or uncontrolled activation of the complement system, a critical component of the immune system.
Analyst Stephen Willey writes that the company “remains significantly underappreciated by investors.” Among other things, he said the company’s life-cycle extension options to “pursue well-established/multi-billion dollar market opportunities via significantly de-risked development pathways creates a compelling investment thesis.”
Mr. Willey said he believes positive Phase 2 proof-of-concept data for Ra’s zilucoplan drug candidate in generalized myasthenia gravis (gMG) and paroxysmal nocturnal hemoglobinuria (PNH) “cement the validity of the zilucoplan value proposition and significantly de-risk future Phase 3 development plans.”
The gMG opportunity represents the cornerstone of Mr. Willey’s valuation thesis, with potential peak U.S./EU sales approaching $2-billion. Zilucoplan also represents a “solution to pricing/reimbursement constraints, which have limited access/utilization to current C5i therapy (despite C5’s central role in gMG pathology),” he added.
In addition, he said future label-expansion into other complement-mediated diseases and incremental product formulation improvements “create significant longer-term optionality excluded from our model.”
