UPDATE: Piper Jaffray Initiates Coverage on Discovery Laboratories with Overweight Rating, $6 PT on Emerging Respiratory Franchise at Breathtaking Value

In a report published Monday, Piper Jaffray analyst David Amsellem initiated coverage on

with an Overweight rating and $6.00 price target. In the report, Piper Jaffray noted, “We are initiating coverage of Discovery Labs with an Overweight rating and $6 price target. We believe that there is ample room for significant value creation, with DSCO now rolling out Surfaxin, a potentially best-in-class FDA-approved agent for the prevention of respiratory distress syndrome (RDS) in high-risk premature infants. With north of $100M in peak sales potential and a lean hospital-based U.S. sales organization focused on neonatologists, we believe DSCO can reach profitability on Surfaxin alone. That said, with the advancement of Aerosurf into Phase II, DSCO has a next-generation shot-on-goal in RDS that would target a far wider population of infants, translating into a transformative peak sales opportunity of north of $300M. With a market cap of under $170M in the context of two high-margin, novel, long-duration assets, we believe that the risk/reward for DSCO is compelling.” Discovery Laboratories closed on Friday at $2.01.