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B Riley Likes Tocagen On Prospects For Company's Brain Cancer Drug

B Riley Likes Tocagen On Prospects For Company's Brain Cancer Drug
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A little more than a year after its initial public offering, Tocagen Inc (NASDAQ: TOCA) has traded down 26 percent, but experts are decidedly bullish on the company’s prospects and potential valuation.

The Rating

B Riley analyst Madhu Kumar initiated coverage on Tocagen with a Buy rating and a $15 price target.

The Thesis

As Kumar sees it, Toca 511/FC has potential to transform the treatment of recurrent high-grade glioma (RHGG), a brain cancer affecting about 14,000 per year with limited-efficacy treatment options.

“Overall, RHGG remains a key clinical opportunity for novel therapies that can demonstrate improved therapeutic response,” Kumar wrote in a Wednesday note.

The failures of comparable candidates for RHGG, such as Vascular Biogenics Ltd (NASDAQ: VBLT)’s VB-111, have little read-across to Toca 511/FC, he said.

Given that Phase 1 data demonstrated positive enough results to merit Breakthrough Therapy Designation and PRIME Designation, Kumar anticipates success in Tocagen’s ongoing Phase 3 TOCA 5 trial.

Interim readouts due in the second half of 2018 and first half of 2019 are seen to propel the stock, with the latter milestone driving a key inflection point. The analyst assumes a 30-percent probability of launch with a 30-percent market share but notes improvements to the estimates could support a $90 share price.

Price Action

Tocagen shares traded up 3 percent to $9.74 at time of publication.

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Latest Ratings for TOCA

May 2018B. Riley FBRInitiates Coverage OnBuy
May 2017Evercore ISI GroupInitiates Coverage OnOutperform
May 2017Leerink SwannInitiates Coverage OnMarket Perform

View More Analyst Ratings for TOCA
View the Latest Analyst Ratings

Posted-In: B Riley Madhu KumarAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


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