Aegis Starts NephroGenex (NRX) at Buy; Diabetic Nephropathy is 'Significant' Unmet Need

Aegis Capital starts coverage on NephroGenex (Nasdaq: NRX) at Buy with an 18-month target price of $25.

Analyst Ram Selvaraju sees NephroGenex having a significant market opportunity. The analyst commented, In our view, diabetic nephropathy constitutes an appealing market niche, since this represents a significant unmet medical need that constitutes a prevalent condition among individuals suffering from diabetes. It is estimated that there are roughly 25mm individuals in the U.S. with diabetes, with an additional 60mm diabetics across Europe. The incidence of diabetes is increasing as the prevalence of poor diet and sedentary habits continues to rise. We note that there are currently no therapies available to address the oxidative damage to the kidney caused by the accumulation of advanced glycation end-products (AGEs). Pyridorin™ has been shown to selectively block pathways that induce the formation of such harmful compounds. We believe that the target market for Pyridorin™ could be as high as 10mm subjects in the U.S. alone. Peak sales for the drug could easily exceed $1bn in only the U.S. market.

With a market cap around $50 million (as of Monday's close) and enterprise value at $17 million, Selvaraju sees NephroGenex as an attractive opportunity. The analyst sees the stock trading with a market cap of over $320 million sometime in late 2015.

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