Maxim Group Starts Rock Creek Pharmaceuticals (RCPI) at Buy
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Maxim Group initiates coverage on Rock Creek Pharmaceuticals (NASDAQ: RCPI) with a Buy rating and a price target of $4.00.
Analyst Jason Kolbert highlighted:
- Rock Creek's lead product, anatabine citrate, which is derived from the natural anti-inflammatory compound, anatabine (from the tobacco plant), is in clinical development for the treatment of psoriasis. Anatabine was a successful nutraceutical ("Anatabloc") used by more than 500,000 people, primarily to alleviate inflammation conditions, like osteoarthritis. There was also anecdotal evidence supporting anatabine citrate exerted on psoriasis. As the product gained popularity, it came across the FDA's radar screen. Subsequently, the company voluntarily withdrew the product from the US market and entered into a development stage to investigate anatabine citrate's clinical benefits.
- The company has just completed an ex-US phase I study consisting of three parts to target psoriasis as an initial indication. The initiation of a follow-up Ib study is set for 1Q16.
- We also note that anatabine citrate's IND is currently on an FDA clinical hold pending additional PK and safety data requested by the FDA. Rock Creek's regulatory strategy is to complete a single-site phase Ib/IIa trial in the EU and prepare data for a multi-site phase IIb trial, which includes the US. The FDA's approval for the phase IIb trial is expected in 2Q16.
- We believe, based on the large amounts of established user data (reports from the Anatabloc users), support the compound's effectiveness as an anti-inflammatory and mitigates much of the risk associated with the product. We see psoriasis (an inflammatory disease manifesting in the skin) as the first of multiple possible indications – the "low-hanging fruit" opportunity. We expect our first look at trial data by year's end. We believe that this catalyst, coupled with a distressed valuation, equals an opportunity for investors.
Shares of Rock Creek Pharmaceuticals closed at $0.89 yesterday.
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