Stifel starts Molecular Templates at buy; PT $19

Molecular Templates

Stifel initiated coverage of Molecular Templates (NASDAQ:MTEM) with a “buy” rating and $19 price target. The stock closed at $13.29 on March 24.

“We believe the engineered toxin body technology from which Molecular’s pipeline of wholly-owned and partnered oncology assets is derived represents a significant source of competitive differentiation,” writes analyst Stephen Willey.

These are capable of both inducing the internalization of targets inaccessible via antibody-drug conjugate technology and leveraging a completely novel mechanism of action, “which we believe will prove particularly impactful in later-line patients with disease refractory to conventional standard-of-care therapies,” he added.

Mr. Willey said the first-generation engineered toxin body technology incorporated into lead asset, MT-3724, “imposes some limitations on the safety/logistical fronts, but we also believe the iterative technological improvements incorporated into MT-5111 and Takeda-partnered, TAK-169, address those limitations and increase the competitiveness of these assets within admittedly crowded development landscapes.”

He said the untapped functionality associated with this platform provides “considerable longer-term pipeline/collaborative optionality (excluded from our model) and expect the many 2020 pipeline-wide clinical updates to provide multiple opportunities for value-creation.”

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