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An 'Unsung Potential Winner,' ObsEva Initiated At Buy

June 29, 2017 1:38 pm
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Terming Obseva SA (NASDAQ:OBSV) as an unsung potential winner in women's health, H.C. Wainwright initiated coverage of the Swiss company at a Buy, with $27 price target.

Analyst Raghuram Selvaraju believes OBE2109, which the company in-licensed from Japan's Kissei Pharmaceutical outside Japan and certain other Asian countries, could be preferred for various reasons. OBE 2109 is a gonadotropin hormone-releasing hormone receptor antagonist, targeting uterine fibroids and endometriosis.

The analyst indicated OBE2109 offers the flexibility for using at both a lower dose, which wouldn't need estrogen, and a higher dose that can be combined with estrogen. Additionally, the analyst said it has a favorable pharmokinetic profile, with low volume of distribution, leading to superior safety. It is orally administered, with once-daily dosing.

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H.C. Wainwright noted that OBE2109 has entered phase 3 trials for uterine fibroids and is in phase 2b testing for endometriosis. The firm expects the treatment candidate to be launched in 2021 in the U.S. and 2022 in Europe, with peak sales estimated at $1.3 billion in ObsEva territories.

The Pipeline

  • OBE2109 – phase 2b study for endometriosis – data to be released in first half of 2018
  • OBE2109 – phase 3 study for uterine fibroids – data to be released in late 2019
  • OBE001 – phase 3 trials for this oxytocin receptor antagonist is in pivotal testing for enhancement in in vitro fertilization; data to be released in mid-2018

Thus, the firm said the next 12-18 months would be catalyst-rich for the company.

Undervalued Shares

H.C. Wainwright noted that ObsEva traded at an enterprise value of $70 million compared to Myovant Sciences Ltd (NYSE:MYOV), which is valued at $560 million, and with its relugolix, has preceded ObsEva in the GnRH receptor antagonist market only by a year.

The firm also thinks ObsEva pipeline beyond OBE2109 is more mature than that of Myovant. Additionally, the firm believes the stock's plunge to $5 from its offer price of $15 per share is not justified, given the company's strong competitive positioning.

At time of writing, ObsEva shares were up 28 percent to $8.10.

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