Tracon's Promising Tumor Treatments Make The Stock A Buy

The promising efficacy of its tumor treatment earns TRACON Pharmaceuticals Inc (NASDAQ: TCON) a Buy rating and $15 price target from BTIG.

Tracon's lead compound, TRC105 (an anti-endoglin antibody) has generated promising efficacy in a variety of solid tumors, including HCC, RCC and angiosarcoma beyond historical control of anti-VEGF monotherapy. BTIG factors in TRC105 sales in angiosarcoma, choriocarcinoma and clear-cell RCC.

"With TRC105 potentially entering pivotal Phase III trials in 2H16, we project a market launch in 2019, with peak US sales of over $300 million across indications," analyst Ling Wang wrote in a note.

Santen Partnership

Meanwhile, advancement of a second compound TRC-10 (in Phase I/II sponsored by NCI) and a wet AMD program, partnered with Santen Pharmaceutical Co., Ltd.(OTC: SNPHY) would provide additional upside.

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"Four Phase II trials are underway in four solid tumors, setting up a catalyst-rich 2016–17 to potentially drive the stock," Wang noted.

Wang is encouraged with Tracon's cost-effective clinical program, as it "manages a broad clinical program for TRC105 internally rather than contract research organizations (CROs), which effectively keeps costs low and allows multiple programs to run in parallel."

Looking Forward

Wang expects 2016 EPS of ($0.33) and sales of $4.367 billion, while projecting 2017 EPS of ($2.32) and sales of $4.5 billion.

Shares of Tracon closed Thursday's regular trading session at $5.88, while the analyst's price target of $15 represents potential upside of 155 percent. At time of publication Friday, shares were up 5.95 percent at $6.23.

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