Goldman Sachs analyst Paul Choi initiates coverage on Corvus Pharmaceuticals (NASDAQ: CRVS) with a Buy rating and a price target of $40.00.

The analyst commented: "Stock at an attractive entry point for the leading emerging oral option in the large post-Dupixent atopic dermatitis market; PTCL opportunity undervalued with significant pipeline-in-a-product potential. We think CRVS shares are attractively positioned as the current valuation does not capture the potential of what we view as a differentiated, emerging oral option for atopic dermatitis (AD); a late-stage, high probability program in PTCL (peripheral T-cell lymphoma); and a reasonable mechanistic rationale (ITK or interleukin-2 inducible T cell kinase) supporting pipeline potential in multiple, adjacent auto-immune conditions (hidradenitis suppurativa, asthma) - all which will have catalysts in the next 12-18 months. The global market for treatments for moderate-to-severe AD is growing rapidly (projected to be $24bn+ in 2035 per GS estimates) driven largely by the success of Dupixent, which GS estimates will generate c. $13bn in 2026 in AD alone. However, despite the step up in effectiveness resulting from the introduction of biologics to the AD treatment arsenal, we note that c. 20% of the patients are refractory or not optimally controlled and KOLs note there remains a large unmet need for next-generation treatment to provide dosing advantage either with longer injection intervals or via oral administration. We are cognizant of the competitive intensity in atopic dermatitis; however, we view soquelitinib (SQL) as one of the most promising candidates in development for treatment refractory atopic dermatitis, supported by: 1) its robust Phase 1 efficacy in patients who have stepped through various late-line therapies, 2) the convenience of an oral drug, and 3) a mechanistic approach outside of targeting the IL-13 axis. We see its broad-spectrum efficacy as mechanistically supported by the immunomodulation from ITK inhibition that serves as a "catch-all" mechanism while maintaining a high margin of safety as the Th1 immune pathway is spared (although we do caveat data are early with limited N to power for safety). Separately, while PTCL is a rare cancer and not necessarily the biggest opportunity, we nevertheless think the value of the program has been overlooked by the market as the clinical hurdle is relatively low and soquelitinib as relatively de-risked and could potentially enter the market in 2029, which provides a base valuation for CRVS as the auto-immune indications advance in the clinic. With respect to its pipeline in a product potential, we see a precedent in dupilumab's development path to achieve indication expansion across type 2 allergic diseases (and beyond) with Phase 2 programs in HS and asthma starting in late 2026. While it is still at an early developmental stage, we can envision CRVS leveraging soquelitinib (like REGN, ARGX, and INSM did with their respective assets) and gradually maturing into large cap biotech over the long term. "

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Shares of Corvus Pharmaceuticals closed at $15.04 yesterday.