Newly Public Gene Therapy Biotech Avrobio Picks Up 2 Sell-Side Bulls

Avrobio Inc AVRO, a developer of gene therapy drugs targeting rare lysosomal storage disorders such as Fabry disease, Gaucher disease, Pompe disease and cystinosis, recently offered 5.25 million shares in an IPO.

With the analyst quiet period expiring, the sell-side began initiating coverage of the biotech stock. 

The Thesis

Morgan Stanley analyst David Lebowitz initiated coverage of Avrobio with an Overweight rating and $37 price target.

Wedbush analyst David Nierengarten initiated coverage of Avrobio with an Outperform and $38 price target.

Morgan Stanley: A Multibillion-Dollar Revenue Opportunity

Avrobio's platform appears "promising and relatively derisked" compared to typical gene therapy companies at a similar stage, Lebowitz said in the Monday note. 

The company joins a rare group of gene therapy companies that boast human clinical data at the time of their IPO, the analyst said. 

Avrobio's therapies offer a potential "one-and-done cure"  at a lower price than existing standard-of-care therapies; the efficacy is "fair-to-subpar at best," Lebowitz said.

"Collectively, AVROBIO's drugs provide a multibillion-dollar revenue opportunity," the analyst said. 

Given that Avrobio owns global commercial rights for all its pipeline therapies, the company owns all downstream revenues, according to Morgan Stanley. 

Over time, Lebowitz projects Avrobio will extend its lentivirus approach to other areas such as immuno-oncology and non-rare diseases.

Wedbush Sees Significant Upside Potential

The shares of Avrobio could hold substantial upside potential, as the company's therapies target rare disorders that are poorly controlled by current treatments, Wedbush's Nierengarten said in a Monday initiation note. 

Reviewing the company's pipeline program, the analyst said AVR-RD-01 is in early- to mid-state studies in patients with Fabry disease. Avrobio's Gaucher disease and cystinosis programs are likely to enter clinical trials in 2019, and the Pompe disease candidate remains in preclinical development, the analyst said. 

The Price Action

Since listing on the Nasdaq June 21, Avrobio shares have lost about 10 percent.

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