H.C. Wainwright Starts Summit Therapeutics plc (SMMT) at Buy
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H.C. Wainwright initiated coverage on Summit Therapeutics plc (NASDAQ: SMMT) with a Buy rating and a price target of $26. Analyst Carol Ann Werther sees Ezutromid for DMD as a potentially multi-billion dollar market opportunity.
"Ezutromid is an oral agent that has the potential to treat all 50,000 DMD patients in the developed world. Exutriomid is able to up regulate the protein production of utrophin which has the potential to develop and repair muscles fibers. Ezutromid has already been shown to be well-tolerated in ~100 healthy volunteers and 24 DMD patients. We expect Summit to commercialize Ezutromid on its own worldwide and to potentially generate ~£1.2B in worldwide sales in FY2026," said Werther.
The analyst continued, "We expect positive additional Ezutromid next generation formulation (F6) DMD data and detailed Phase 2 RDZ results in CDI patients in 3Q16. Details of the F6 formulation may be at possibly 21st International WMS Congress October 4-8 in Granada, Spain or Action Duchenne International Conference November 11 12 in London, UK. In our view, RDZ is de-risked with the positive Phase 2 data. In our opinion, the most important inflection point for Ezutromid data is the initial PhaseOut F3 formulation 24-week biopsy are expected in 2Q/3Q 2017."
Discussing the $26 price target, the analyst said, "Our $12-month target price is $26.00 based on a discounted multiple of revenue and EPS. We forecast 7-year compounded revenue growth rate of ~17% and a 5-year EPS growth rate of ~20%. The revenue growth rate may appear low; however, we have taken into account a rapid launch if Ezutomid is successful. We forecast Summit’s first year of profitability will be FY2021. Using a 30x EPS multiple and a 35% discount-rate we arrived at a 1-year price target of $33.65. Using a 10x revenue multiple and a 35% discount rate, we arrive at $18.34 price target. Using an average, our 2017 price target is $26.00 per share."
Shares of Summit Therapeutics plc closed at $5.50 yesterday.
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