Target Price Raised On Biopharma After It Acquires Company, Splits Stock

Source: Streetwise Reports   09/20/2021

AzurRx BioPharma now has five additional shots on goal “with the imminent full acquisition of just one compound,” a ROTH Capital Partners report noted.

In a Sept. 17 research note, analyst Jonathan Aschoff reported that ROTH Capital Partners changed its target price to $20 per share from $5 on AzurRx BioPharma Inc. (AZRX:NASDAQ) after its 10 for 1 reverse stock split and its announced acquisition of First Wave Bio, a private company, for $229 million ($229M). AzurRx’s current share price is about $3.84.

With the transaction, AzurRx, which develops therapies for gastrointestinal (GI) diseases, will gain one new drug candidate, niclosamide, but with it “several shots on goal,” Aschoff noted. Niclosamide could treat five lucrative GI indications: COVID-19 GI infection, ulcerative proctitis/proctosigmoiditis, immune checkpoint inhibitor-associated colitis (ICI-AC), ulcerative colitis and Crohn’s disease.

Niclosamide has some significant advantages over approved therapies, Aschoff pointed out. It has a smaller particle size of about 7 micrometers compared to the typical 60 and therefore a greater surface to solvent ratio, resulting in improved dissolution. Also, as shown in preclinical studies, its much higher GI concentration does result in significant systemic absorption. Further, the niclosamide’s excellent safety profile means the treatment could be combined with inflammatory bowel disease drugs.

“We expect AzurRx to waste little time furthering development of its newly expanded pipeline,” Aschoff wrote.

In the last quarter of this year, the newly formed company is expected to commence two trials of niclosamide, a Phase 1b/2 in ICI-AC and a Phase 2 in ulcerative proctitis. The latter will be an addition to its ongoing Phase 2 trial in COVID-19 GI infection. Thus, by year-end, the biopharma will have three Phase 2 niclosamide programs in progress. (Previously, AzurRx and First Wave Bio had signed a drug agreement regarding niclosamide for COVID-19 GI infection and ICI-AC.)

Next year in H2, the combined biopharma intends to start a Phase 1b/2a niclosamide trial in ulcerative colitis and a little further out in early 2024, a Phase 2a niclosamide trial in Crohn’s disease.

Aschoff discussed the $229 million ($229M) deal. He wrote that the acquisition value is far greater than what AzurRx will pay to complete the transaction. Upfront, AzurRx will pay $3M in cash and $4M in common stock. Subsequently, it will make two cash payments: $8M within 45 days of closing and $7M by March 31, 2022. AzurRx will pay First Wave the remaining $207M as certain milestones are achieved, and those payments will consist of at least 75% cash and a maximum 25% stock.

“We view these initial few payments as more than reasonable for full economics on the five additional shots on goal that AzurRx now has with the imminent full acquisition of just one compound,” Aschoff added.

When the acquisition closes, AzurRx will rename the company First Wave BioPharma, which will have FWBI as its ticker symbol as of Sept. 23, 2021.

ROTH has a Buy rating on AzurRx.

Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of AzurRx BioPharma, Inc., a company mentioned in this article.
6) This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.

Disclosures for ROTH Capital Partners, AzurRx BioPharma, Sept. 17, 2021

Within the last twelve months, ROTH Capital Partners, or an affiliate to ROTH Capital Partners, has received compensation for investment banking services from AzurRx BioPharma, Inc.

ROTH makes a market in shares of AzurRx BioPharma, Inc. and as such, buys and sells from customers on a principal basis. Shares of AzurRx BioPharma, Inc. may be subject to the Securities and Exchange Commission’s Penny Stock Rules, which may set forth sales practice requirements for certain low-priced securities.

Not Covered [NC]: ROTH does not publish research or have an opinion about this security.

ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and  uncertainties that could cause actual results to differ materially from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors.