Upcoming Catalysts Make Axovant Attractive, Jefferies Says In Upgrade

Axovant Sciences Ltd AXON plummeted 25 percent last week, providing an attractive entry point, as the company is in-licensing two promising orphan gene therapy programs that could have data coming over the next three to 12 months, according to Jefferies.

The Analyst

Jefferies' analyst Michael J. Yee upgraded Axovant from Hold to Buy and raised the price target from $2.50 to $3.

The Thesis

The 25-percent sell-off in Axovant shares last week was triggered by the failure of a legacy program, Yee said in the Monday upgrade note. (See his track record here.) 

The valuation is now attractive given that the program was not included in any model and that the company has two promising orphan gene therapy programs in the pipeline, the analyst said. 

Data for GM2, a rare and fatal neuro disease, is expected in February. This will be followed by interim data in March from an ongoing gene therapy trial for Parkinson's. Data from GM1 orphan disease can be expected in the back half of 2019, according to Jefferies. 

Given these catalysts and the recent share price pressure, Axovant’s stock appears cheap versus its gene therapy peers such as Voyager Therapeutics Inc VYGR and Rocket Pharmaceuticals Inc RCKT, Yee said. 

Axovant’s stock could “return a meaningful percentage for small cap investors” and appreciate from the current price of around $1 to $3 over the next year, the analyst said. 

Price Action

Axovant shares were climbing 14.65 percent to $1.16 at the time of publication Monday. 

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Posted In: JefferiesMichael J. YeeAnalyst ColorBiotechUpgradesPrice TargetAnalyst RatingsGeneral