Janney starts Baudax Bio at buy; fair value estimate $12

Janney Montgomery Scott launched coverage of Baudax Bio (NASDAQ:BXRX) with a “buy” rating and fair value estimate of $12. The stock closed at $4.51 on Nov. 21.

Baudax was spun out of Recro Pharma (NASDAQ:REPH) in a stock dividend and will start trading on Nov. 22. Recro is retaining the contract development and manufacturing (CDMO) business, while Baudax is receiving the acute care business.

Baudax’s key product is Anjeso, a long-acting intravenous formulation of meloxicam, an established non-opioid pain reliever, available through an oral formulation. “We see a high probability of FDA approval in the first quarter of 2020, which would be a meaningful catalyst to drive the stock towards our fair value,” writes analyst Ester Hong.
She estimates peak U.S. sales of $355-million for Anjeso but sees “upside from increased demand for a potent non-opioid that allows patients to recover and go home faster.”

Baudax also has an early-stage pipeline, which will enter Phase 1 clinical trials in 2020.

“In the immediate future, we believe we could see stock price pressure if current holders of Recro, who are predominantly in the stock for the CDMO, sell Baudax shares received from the spin-off. To the extent this occurs, we’d view it as a buying opportunity,” Ms. Hong said.

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