Target Price Raised on Biotech Based on Management Update

Source: Streetwise Reports   12/13/2021

During its recent R&D Day, Prometheus Biosciences announced new strong trial data, another new indication for its lead therapeutic candidate and progress in developing a subcutaneous formulation of it, according to an Oppenheimer report.

Prometheus Biosciences Inc. (RXDX:NASDAQ) earned a rating upgrade and target price increase from Oppenheimer based on Prometheus’ significant news relayed in the recent management update, analyst Jeff Jones reported in a Dec. 7 research note.

The brokerage/investment bank now rates Prometheus Outperform and assigns it a $50 per share price target, up from $35. In comparison, the biotech’s share price today is about $33.14.

California-based Prometheus develops therapeutics and companion diagnostics addressing unmet needs in gastrointestinal and autoimmune diseases.

Jones relayed the three key messages Prometheus delivered in its recent update.

One, management revealed that Prometheus’ therapeutic candidate, PRA023, showed efficacy in the recent Phase 1 results and differentiated itself from Pfizer’s PF-06480605, Jones wrote. Comparing the two, PRA023 showed a less than or equal to 20% immunogenicity response to clinically meaningful doses whereas PF-06480605, in a Phase 2 study, demonstrated a greater than 80% anti-drug antibody response (the smaller the response number, the better).

Management also pointed out that PRA023 binds both active trimer and inactive monomer forms of TL1A, and PF-06480605 only binds the active trimer form.

“We are optimistic that their different target engagement profiles could distinguish these products in the clinic, accentuating the importance of the Q4/22 clinical readout,” Jones commented.

Two, management announced a third indication for PRA023, systemic sclerosis-associated interstitial lung disease, and plans for an associated Phase 2 trial. For this, enrollment of patients from about 50 global sites is slated to start in Q1/22 and will take about a year to complete.

“Data are expected to support progression directly into a Phase 3 pivotal study,” noted Jones.

About 80,000 people in the U.S. have systemic sclerosis, and about half of those develop interstitial lung disease, the analyst noted. Among that population there is an unmet need for more efficacious treatment than the existing ones. Thus, Oppenheimer calculates Prometheus could generate more than $400 million in U.S. net sales of PRA023 within five years of it being put on the market.

Three, Prometheus has advanced its subcutaneous PRA023 past the preliminary testing stage, in which it had success administering PRA023 in concentrations as high as 200 milligrams per milliliter. The biotech will conduct human bioavailability studies on the formulation early next year, aiming to complete them in time for the subcutaneous PRA023 to be used in upcoming pivotal studies.

This progress with the subcutaneous formulation “suggests the potential for a simple, patient-administered auto-injector at commercialization,” Jones pointed out.

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) do not own securities of Prometheus Biosciences 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.

Important Disclaimers for Oppenheimer & Co. Inc., Prometheus Biosciences Inc., Dec. 7, 2021

Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Analyst Certification – The author certifies that this research report accurately states his/her personal views about the subject securities, which are reflected in the ratings as well as in the substance of this report. The author certifies that no part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report.
Potential Conflicts of Interest: Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firm including the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.
Company Specific Disclosures: In the past 12 months Oppenheimer & Co. Inc. has provided investment banking services for RXDX. In the past 12 months Oppenheimer & Co. Inc. has received compensation for investment banking services from RXDX. Important disclosures, including price charts, are available for compendium reports and all Oppenheimer & Co. Inc.-covered companies by logging on to https://www.oppenheimer.com/client-login.aspx or writing to Oppenheimer & Co. Inc., 85 Broad Street, New York, NY 10004, Attention: Equity Research Department, Business Manager.
Other Disclosures: This report is issued and approved for distribution by Oppenheimer & Co. Inc. Oppenheimer & Co. Inc. transacts business on all principal exchanges and is a member of SIPC. This report is provided, for informational purposes only, to institutional and retail investor clients of Oppenheimer & Co. Inc. and does not constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider whether such recommendation is appropriate given the recipient’s particular investment needs, objectives and financial circumstances. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial advisor. Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this report. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to Oppenheimer & Co. Inc. All information, opinions and statistical data contained in this report were obtained or derived from public sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by Oppenheimer & Co. Inc. or individual research analysts), and they should not be relied upon as such. All estimates, opinions and recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice. Nothing in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment having potential tax implications, clients should consult with their own independent tax adviser. This report may provide addresses of, or contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient’s convenience and information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to access such third-party web sites or follow such hyperlinks do so at their own risk.
This research is distributed in the UK and elsewhere throughout Europe, as third party research by Oppenheimer Europe Ltd, which is authorized and regulated by the Financial Conduct Authority (FCA). This research is for information purposes only and is not to be construed as a solicitation or an offer to purchase or sell investments or related financial instruments. This research is for distribution only to persons who are eligible counterparties or professional clients. It is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. In particular, this material is not for distribution to, and should not be relied upon by, retail clients, as defined under the rules of the FCA. Neither the FCA’s protection rules nor compensation scheme may be applied. https://opco2.bluematrix.com/sellside/MAR.action
Distribution in Hong Kong: This report is prepared for professional investors and is being distributed in Hong Kong by Oppenheimer Investments Asia Limited (OIAL) to persons whose business involves the acquisition, disposal or holding of securities, whether as principal or agent. OIAL, an affiliate of Oppenheimer & Co. Inc., is regulated by the Securities and Futures Commission for the conduct of dealing in securities and advising on securities. For professional investors in Hong Kong, please contact researchasia@opco.com for all matters and queries relating to this report.
ESG Scores: ESG scores from Refinitiv are designed to transparently and objectively measure a company’s relative ESG performance, commitment and effectiveness, based on company-reported data. This covers 10 main themes including emissions, environmental product innovation, human rights, shareholders and so on. Ratings are available on close to 10,000 companies globally, with time-series data going back to 2002. The percentile rank scores are simple to understand and transparent. They are benchmarked against The Refinitiv Business Classifications (TRBC – Industry Group) for all environmental and social categories, as well as the controversies score. They are also measured against the country of incorporation for all governance categories.
Please note that all ESG ratings are independent of Oppenheimer stock ratings. They are intended to provide supplemental information regarding ESG for our covered companies. ESG ratings do not have any impact on the stock rating.
This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc. Copyright © Oppenheimer & Co. Inc. 2021.