BMO: Aeglea Has A Potentially Market-Conquering Arginase Deficiency Candidate, Oncology Opportunity

Aeglea Bio Therapeutics Inc AGLE hasn’t received much attention in its two years on the market, but on Thursday it caught the eye of its fourth analyst and fourth bull.

The Rating

BMO Capital Markets analyst Matthew Luchini initiated coverage of Aeglea with an Outperform rating and $21 price target.

The Thesis

BMO expects Aeglea’s pegzilarginase to transform the treatment of Arginase I Deficiency (ARG1-D), which currently lacks effective therapies.

“Pegzilarginase could be the standard of care in ARG1-D, a nearly $400-million unadjusted peak sales opportunity,” Luchini said in a note. The analyst forecast that Aeglea will capture 90 percent of the market within five to nine years. 

The program appears to be derisked by recent Phase 1 and 2 trial data linking clinically relevant improvements to arginine reduction, Luchini said.

BMO expects to see similar results among more patients in the third quarter, paving the way for Phase 3 trials in 2019 and likely approval in 2021.

Notably, the candidate is seen to have potential in oncology, in which there are two ongoing studies with data expected in the fourth quarter.

“We believe the rationale for development in cancer is solid given the large proportion of tumors with arginine-dependence biomarkers across a range of cancer subtypes,” Luchini said. 

He anticipates peak sales exceeding $1 billion in melanoma and small-cell lung cancer alone. 

Price Action

Shares peaked 9 percent on the BMO rating but had faded back to $10.24 by the time of publication Thursday. 

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