Aegis Capital Starts Alder Biopharma (ALDR) at Buy; Positive on ALD403 into Phase 3, Notes Strong Cash Position
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Aegis Capital starts coverage on Alder Biopharmaceuticals Inc. (Nasdaq: ALDR) with a Buy rating and $41 price target.
With today's initiation, Aegis noted the following key points:
- EPS beat, Catalysts lie in Promise 1 & 2 trials. For the third quarter of 2016 Alder reported an earnings loss of ($0.70) per share, coming in above consensus estimates of ($0.85). The company reported no revenue for the quarter and is moving its lead product candidate, ALD403, into phase III trials (Promise 1 & 2). The pivotal trials are expected to report topline results in 1H17 (Promise 1) and 1H18 (Promise 2), and should lead to a BLA submission in 2H18. The trials are supported by data from a recent successful phase IIb trial.
- Significant unmet medical need in migraines and blockbuster potential for ALD403. Each year in the US frequent or chronic migraines are experienced by approximately 10 to 14 million adults, which according to the Migraine Research Foundation leads to just under $13 billion in lost productivity in the US alone. One of four calcitonin gene-related peptide (CGRP) class biologics in late-stage development, at its current pace and pathway, ALD403 is in position to capture market share in the US and EU upon approval. We estimate ALD403 US drug sales reaching $1 billion annually well before patent expiration in 2032.
- Competitive profile and dosing advantage among CGRP's. A primary advantage of ALDR403 vs. other close-to-market CGRPs is its dosing schedule, which consists of a single IV treatment every 3 months. The remaining 3 CGRPs in late-stage development rely on monthly subcutaneous injections. We do not believe that IV form is a disadvantage in relation to subcutaneous injections. One of the main competitors about to enter the space, Amgen, recently announced top-line data for Erenumab from a Phase III, randomized, double-blind placebocontrolled study. The results showed statistically significant reduction across those receiving Erenumab of 2.9 days from the monthly baseline of 8 days at 12 weeks vs. a 1.8 reduction in the placebo arm. Given the data we've seen, we believe that Alder's drug may possess higher efficacy than both Amgen's and Teva's.
- $403 mil cash runway and a set stage for ALD403. We estimate that the $403 mil in cash and cash equivalents and short-term investments on Alderfs balance sheet as of September 30, 2016 should fund operations through 1H18. The path to BLA filing is clear for ALD403, and assuming Promise 1 & 2 clinical successes, we expect to see marketing approval in 2019 for the US and 2020 for the EU.
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