Analysts at Baird Equity Research have awarded Arbutus Biopharma a ‘Neutral’ rating after the early-stage biopharmaceutical company announced that its investigational new drug application for its novel, oral PD-L1 inhibitor AB-101 for hepatitis B has been put on a clinical hold by the US Food and Drug Administration (FDA).
The company said AB-101 was designed to “reawaken and boost” the immune system of chronic hepatitis B patients and believes that, when used in combination with other approved therapies, could potentially lead to a functional cure in hepatitis B patients.
Baird’s analysts pointed out that the clinical hold on AB-101 stopped the company's program before it even got started.
“Even in a best-case scenario, we believe this pushes back the time frame on any data past this year; however, if serious enough of an issue, the company may need to go back to the drawing board on this program,” they wrote in a note to clients.
They added that the hold also slowed the company’s momentum toward promoting several new mechanisms of action for hepatitis B into the clinic this year.
’We remain neutral on the opportunity here, given the ambiguity around the hep B opportunity but note that patent litigation with Moderna (not covered) optionality as a key feature that offers a good backstop to valuation here,” they wrote.
The analysts awarded the stock a $4 price target from a combination of valuation methodologies: discounted cash flow, projected earnings per share multiple, and sum of the parts.
The company’s shares were trading down 0.4% at US$2.52 on Wednesday afternoon.
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