Janney: Time To Buy Raptor Pharmaceuticals

In a report published Wednesday, Janney Capital Markets analysts initiated coverage of

with a Buy rating and a fair value estimate of $16. Raptor Pharmaceuticals has PROCYSBI (RP103) currently approved in the US and EU to treat a rare genetic condition known as nephropathic cystinosis. The company is also evaluating RP103 for the treatment of pediatric NAFLD/NASH, Huntington's disease, and for the treatment of Leigh syndrome, a mitochondrial disorder. In the report Janney Capital Markets noted, "Raptor is developing RP103 for the treatment of pediatric Non-Alcoholic Fatty Liver Disease (NAFLD)/Non-Alcoholic Steatohepatitis (NASH). Data from a Phase IIa NASH trial looks promising and is the basis for a controlled Phase IIb trial in 160 juvenile patients." The disease is expected to grow rapidly, with an increase in the obesity rate. The analysts estimate a target population of 1,000,000 in the US and 250,000 in the EU. "PROCYSBI is currently Raptor's primary revenue generator and was approved by the FDA for the treatment of a rare disease known as nephropathic cystinosis in 2013. The drug represents a major improvement over the existing therapy for the disease, especially given its improved dosing which should lead to higher compliance rates," the analysts wrote. Raptor has successfully reached out to the existing patient pool, resulting in steady revenue growth. Janney Capital Markets expects sales of $88 million in 2015 to grow to $129 million by 2017. "Raptor recently raised $93.5 million (net of fees) through the issuance of 10.9 million shares. This brings pro forma cash to $245 million, giving the company the cash to support its growing clinical program," the report added.