Chardan Capital Markets Upgrades Arbutus Biopharma (ABUS) to Neutral
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Chardan Capital Markets upgraded Arbutus Biopharma (NASDAQ: ABUS) from Sell to Neutral amid 37%-52% underperfomance vs ARWR and S&P Biotech Index.
Analyt Madhu Kumar commented, "Given Arbutus share price underperformance relative to Arrowhead (Buy) and the XBI in the past three months, we now upgrade Arbutus to Neutral ahead of 4Q16/2017 clinical catalysts in the phase IIa study of ARB-1467. Over the past three months (from market close 13 July to market close 13 October), Arbutus shares have performed -28% (from $4.06/share to $2.94/share), in contrast to both Arrowhead shares (+24%, from $5.60/share to $6.95/share) and the SPDR S&P Biotech Index (+9%, from $56.23/share to $61.34/share). Based upon this relative underperformance, we upgrade Arbutus to Neutral. Though we now have a Neutral rating for ABUS, we remain cautious given:
1. Arbutus’ lead hepatitis B virus (HBV) asset, ARB-1467, to us has demonstrated at best mediocre clinical results relative to competitors in the HBV RNAi therapy space, including ARC-520 from Arrowhead. These mediocre results were, to us, entirely predictable based upon inferior preclinical data for ARB-1467 relative to HBV RNAi assets ARC-520; ALN-HBV from Alnylam (Buy); and BB-HB-331 from unrated Benitec (please refer to our 30 September note "Reiterate Sell: ARB-1467 phase IIa failure reinforces inferiority in HBV RNAi").
2. The remainder of Arbutus’ HBV pipeline consists of previously failed and/or preclinical assets that face competition from unrated Gilead, Johnson & Johnson, Assembly, Spring Bank and private Replicor and Enyo. Moreover, Arbutus' position that its in-house pipeline provides them a unique advantage in combination HBV therapy is undermined by the recently announced collaboration between Arrowhead and Spring Bank to combine clinical assets ARC-520 and SB 9200 (a RIG-I/NOD2 agonist) with nucleoside therapy in the MONARCH phase IIb trial in HBV. To us, combinations of clinically validated drugs have a greater chance to succeed in achieving durable therapeutic responses in HBV at a faster rate than Arbutus' largely preclinical pipeline."
Shares of Arbutus Biopharma closed at $2.94 yesterday.
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