Stifel initiated coverage of Precision Biosciences (NASDAQ:DTIL) with a “buy” rating and $21 price target. The stock closed at $8.11 on March 4.
“Our positive thesis is predicated on optimism that Precision’s allogeneic CAR-T candidate, PBCAR0191, will be differentiated from autologous CAR-Ts by alleviating limitations associated with the long and complicated manufacturing process that exists with approved therapies,” writes analyst Benjamin Burnett.
“We are positively biased into the next PBCAR0191 data update as we think investor expectations are low and that higher dose data are likely to lead to an improved clinical profile over what was disclosed previously,” he added.
Mr. Burnett also said the recent volatility in Precision shares offers an attractive entry point and renders some of the risks associated with the safety/tolerability of CAR-T, such as cytokine release syndrome and neurotoxicity, and competition more palatable.
He is ascribing a probability of success of 45% to Precision’s PBCAR0191 versus a probability of success of 50% to Allogene Therapeutics’ ALLO-501 drug candidate, a difference of 5%. “At a valuation disparity of about eightfold, we think the market is grossly mispricing the relative risk facing each of these assets.”
