Wedbush Continues Outperform Rating on Regulus

In a report published Thursday, analyst Liana Moussatos of Wedbush Morgan maintained an Outperform rating on

, with the price target set to $41. In the report, Wedbush Morgan noted, "For Phase 2 RG-101/HCV testing, we prefer repeat dose monotherapy for simplicity but would like to see combinations with a potential best-in-class DAA in the pipeline and a separate arm with an approved DAA. In our view, the simplest treatment for HCV could be 1-2 shots of RG-101 monotherapy. However, we also view combinations with DAAs as promising. Due to RG-101's robust action--independent of genotype, treatment history and fibrosis stage--for combination treatment the company prefers pan-genotypic DAAs and has narrowed its choices to three. We would like to see one combination arm in the Phase 2 trial with Achillion's pipeline DAA given the rapid cure rate in 6-8 weeks instead of 12 weeks or more by the currently approved DAAs. We also see advantages to using an approved DAA, as well, in case a pipeline DAA is not on the market when RG-101 is potentially launched. The Phase 2 trial is expected to begin in Q2 with initial data release by year-end. We believe investors are likely to focus on monotherapy and potentially best-in-class combinations with rapid cures across genotypes." "We anticipate the choice of DAA for RG-101 Phase 2 combination arms could provide near-term upside for the stock. The choice of DAA(s) for the combo therapy could also suggest which pharma becomes a partner and we anticipate a lucrative arrangement for Regulus," Moussatos wrote.