Positive Data From Orchard Therapeutics Turns Goldman Sachs Bullish

Orchard Therapeutics PLC – ADR ORTX, a rare disease gene therapy company, recently went public, offering 14.29 million shares at $14 each. The shares were listed on the Nasdaq Oct. 31 and ended the session flat.

Goldman Sachs, which initiated the stock with a Neutral Nov. 26, has now turned bullish.

The Analyst

Analyst Graig Suvannavejh upgraded Orchard from Neutral to Buy and hiked the price target from $18 to $21.

The Thesis

The recently released positive proof-of-concept, or POC, data for OTL-102, an early stage gene therapy candidate for X-linked chronic granulomatous disease, or X-CGD, has increased the probability of the program's success from the initially estimated 30 percent to 60 percent, Suvannavejh said in the Monday upgrade note. 

X-linked primary immune deficiency is characterized by recurrent, life-threatening bacterial and fungal infections.

The analyst expects multiple news catalysts in 2019, including clinical data on late-stage candidates currently in registrational trials and key POC data for OTL-300 for beta thalassemia.

The data positions Orchard well for potential appreciation, Suvannavejh said. 

The clinical POC for OTL-102 demonstrated 12 months or longer restoration of immunity in X-CGD patients, according to Goldman Sachs. 

Orchard should meet health regulatory authorities in 2019 to determine the next steps in OTL-102's clinical development, Suvannavejh said. Conservatively, the analyst estimates a second-half-of-2019 timeline. 

The gene therapy company is about to build a manufacturing facility in Fremont, California that will add 15,000 square feet of manufacturing capacity and office space, the analyst said. 

Orchard signed a license agreement with SIRION Biotech to use the latter's LentiBOOST tech to increase lentiviral transduction, an important lever for "optimizing manufacturing efficiency for ex vivo autologous hematopoietic stem cell gene therapies," Suvannavejh said. 

The recent appointment of Alicia Secor to the board is a positive given her experience in rare diseases and patient advocacy, according to Goldman Sachs. 

The Price Action

Orchard shares have added 4 percent since listing. The stock was down 2.13 percent at $14.25 at the time of publication Monday. 

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