4 Hot Analyst Reads For Friday, July 13th

A synopsis of recent analyst activity that could buoy these small cap biotech stocks in trading today

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Here are four small cap stocks seeing notable analyst commentary just before we open the last trading day of the week.

H.C. Wainwright reissues a Buy rating and $23 price target on Zynerba Pharmaceuticals (ZYNE) this morning. Yesterday, the company disclosed encouraging results from a Phase 2 study for its compound 'ZYN002' targeting the rare affliction Fragile X Syndrome. Here is the commentary from Wainwright's analyst

“Valuation and risks. Our $23 target is based on a 35% probability of success weighted DCF including ZYN002 peak $700M U.S. sales, a 14% WACC discount, and negative 15% terminal growth beyond 2028 (balancing the loss of potential orphan exclusivity with IP out to 2030 and beyond). We include assumed dilution in our DCF (17.5M shares vs. current 13.6M). Zynerba had $52.1M cash at end-1Q18 (no debt) which the company states should last in 2H19.”

Small antibiotic concern Achaogen (AKAO) gets a 'shout out' from Mizuho Securities today which reiterates its Buy rating and $20 price target with the following color

“We attended the investor lunch hosted by Achaogenyesterday in New York. Two key opinion leaders presented their perspective on current treatment options for infections as well as how ZEMDRI (plazomicin) may fit into their treatment algorithm. Management also discussed the upcoming commercial launch of the drug and the market opportunity in the U.S. The discussion reinforced our view that the use of plazomicin is unlikely being restricted to CRE-related cUTI, rather physicians are likely using it for treating all CRE infections. The drug appears positively differentiated and holds strong potential in a market where innovation and capital investment has been limited in recent years.”

We concur and believe the recent ~30% sell-off since FDA approval on its primary drug candidate plazomicin mirrored that of its Ad Comm Panel on May 2nd is a buying opportunity. We recently did a synopsis on the bull case for Achaogen on SeekingAlpha.

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InflaRX (IFRX) gets its third new Buy initiation in recent weeks as BMO Capital assigns a new Buy rating and $45 price target on this German based biotech company developing inhibitors for use in s variety of autoimmune and other inflammatory diseases. To close out June, both Raymond James ($44 price target) and SunTrust Robinson ($55 price target) initiated InflaRx as a new Buy.

Finally, small oncology concern Verastem (VSTM) continues to attract new and positive analyst commentary. This morning it is BTIG with a new Buy rating and $17 price target. BTIG's analyst cites

"the potential of the company's pipeline - namely the "late-stage, first-in-class molecule Duvelisib that selectively targets the delta and gamma phosphoinositide 3-kinase isoforms, central signaling pathways in cancer cell proliferation and survival". Verastems successful Phase 3 DUO trial in relapsed/refractory chronic lymphocytic leukemia, combined with solid data from the Phase 2 DYNAMO study in refractory follicular lymphoma, have led to Duvelisib receiving a Priority Review from FDA" with an upcoming Oct 5th PDUFA, as well as a licensing deal. The analyst models potential U.S. peak revenue over $500M and international revenue over $350M in Duvelisib's initial indications."

We concur with the analyst enthusiasm as Verastem has been a big winner since its inclusion into the Busted IPO Forum model portfolio and we still see further upside ahead. It's primary drug candidate seems poised to be approved in early October and it has an evolving pipeline as well.

And those are four small and mid cap concerns seeing recent analyst activity before the market opens this Thursday. Happy Hunting.

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