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Bank Of America Sees NewLink Genetics As 'Undervalued'

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Bank Of America Sees NewLink Genetics As 'Undervalued'
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Reasoning that NewLink Genetics Corp (NASDAQ: NLNK) shares are undervalued, Bank of America Merrill Lynch initiated coverage at Buy with a $22 price target.

At time of writing, shares were rallying 8.45 percent at $12.20.

The Drug & The Mechanism Of Action

NewLink Genetics is a clinical-stage biotech company, whose lead product candidate is Indoximod, an IDO, or indoleamine-2, 3-dioxygenase, pathway inhibitor for treating cancer. IDO is an enzyme that's upregulated in tumors as a mechanism for escaping the patient's immune system.

Treating with Indoximod helps overcome IDO-induced immunosuppression and re-establishes immune system control of cancer.

Efficacy, In Line With Competing Therapies

Analyst Yin Huang noted that data from mid-stage trial of Indoximod, plus Merck & Co., Inc. (NYSE: MRK)'s Keytruda in melanoma demonstrated that the treatment is efficacious compared to competitive therapies, such as Incyte Corporation (NASDAQ: INCY)'s epacadostat and Bristol-Myers Squibb Co (NYSE: BMY)'s Opdivo/Yervoy combo.

See Also: Attention Biotech Investors, Here's Your PDUFA Primer For October

A 61 percent overall response rate and 12.9 months of progression-free survival were seen in patients treated with Indoximod-Keytruda combo, the analyst said. The analyst also noted the combo showed 29 percent grade 3+ toxicity compared to Keytruda monotherapy.

"If the efficacy and tolerability can replicate in a larger confirmatory study, we believe indoximod could gain appreciable market share in first-line melanoma," Huang said.

Questions Remain

BofA sees baseline characteristics such as elevated LDH, M1c-stage and PD-L1 expression impacting patient response to treatment. The firm said a lower proportion of patients with elevated LDH and M1c status enrolled in NewLink Genetics' Phase 2 study may skew the patients toward more favorable prognosis, regardless of treatment.

Giving the timeline of the trials, the firm said complete Phase 2 results are likely to be out in 2018, significantly catalyzing the stock. The firm expects the Phase 3 top-line data in 2020.

Latest Ratings for NLNK

DateFirmActionFromTo
Oct 2017Bank of AmericaInitiates Coverage OnBuy
Sep 2017BairdUpgradesNeutralOutperform
Sep 2017JefferiesUpgradesHoldBuy

View More Analyst Ratings for NLNK
View the Latest Analyst Ratings

Posted-In: Bank of America Merrill Lynch Yin HuangAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga

 

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