Aduro Biotech Initiated With Buy, $40 Target At BofA

In a report published Monday, BofA Merrill Lynch analysts initiated coverage on Aduro Bio Tech Inc ADRO with a Buy rating and a price target of $40. Aduro BioTech is an emerging player in the immune-oncology segment and has a strong immunotherapy pipeline. The company is developing two first in class cancer immunotherapy platforms: LADD (Live- Attenuated, Double-Deleted Listeria monocytogenes) and cyclic dinucleotide (CDN) technologies. Both the platforms aim to use a patient's own immune system to target cancer cells and have so far demonstrated encouraging results. In the report BofA Merrill Lynch noted, "Given the broad utility and transformative potential of these two platforms, we believe ADRO shares are attractively priced, and any further validation of efficacy/safety in the clinic over the next 2 years could drive significant upside.". The company's LADD Vaccine CRS-207 has already shown good preliminary results in the treatment of pancreatic cancer and mesothelioma. Aduro Bio Tech is also trying a combination of immune therapies. "We estimate $2.6B in peak ‘207 sales across all indications, with room for upside if the triple combo is effective at inducing a durable, robust response," the analysts added. Aduro Bio Tech's CDN platform is also being viewed positively and the company has already entered into a $750 million deal with NVS. "Aduro's lead CDN candidate ADU-S100 has shown potent anti-tumor activity on its own; however, we are drawn to the potential for combinations with other cancer immune therapies, including Aduro's own LADD vaccines. We view the CDN program as high risk, high reward but potentially a blockbuster opportunity if effective and safe in patients," the analysts wrote.