RE: £50 per share....£8 billion12 Oct 2020 22:40
For who hasn't read it yet.
NUMIS
Synairgen (Buy, TP: 990p) World-class asset to treat SARS-CoV-2
Synairgen has developed an inhaled version of interferon-beta (SNG001), that has recently proven highly effective for the treatment of SARS-CoV-2 (COVID-19) in a gold-standard, placebo-controlled Phase 2 study conducted across leading respiratory centres in the UK. The drug is widely known to enhance the innate immune response, which is the body's first line of defense against viruses, and is unique in being delivered directly into the lungs, where respiratory viruses initally take hold.
Subject to funding we expect a pivotal trial to start before the end of the year, and if the Phase 2 data is replicated in a larger Phase 3 study, SNG001 would be the most effective treatment for SARS-CoV-2 with future potential to treat various seasonal, endemic, and pandemic threats.
We initiate coverage with a Buy rating and 990p price target (6x upside) derived from a base (70%)/bear (30%) scenario analysis, which in our view represents a very compelling risk/reward proposition.
Download World-class asset to treat SARS-CoV-2
(36 pages)
Prospects have been transformed: The ongoing SARS-CoV-2 pandemic has demonstrated the threat posed by respiratory viruses. In a matter of months, capabilities have evolved to be able to test for, track and isolate infected patients to protect the vulnerable, yet numbers of cases, hospitalisations and sadly deaths, are still rising. We expect this capability will be retained, and that a therapeutic market and infrastructure for identifying and treating SARS-CoV-2 (and other respiratory viruses) has been rapidly created, that could be worth $20bn/year, a fraction of the costs of global lockdown.
Innately attractive: The innate immune response is known to weaken with age and illness (Source: WHO). The elderly and those with underlying conditions are the most vulnerable to SARS-CoV-2. SNG001 has been shown to activate, enhance and extend the innate, antiviral defense as measured using biomarkers in these patients. Synairgen's drug has previously been shown to be effective against SARS-1 and MERS, and based on Phase 2 data appears more effective than Gilead's Remdesivir. Insights from industry players, clinicians and KOLs support our views.
Compelling risk/reward: We detail the risks facing Synairgen throughout this note, but given the strong data in Phase 2, we place the chance of Phase 3 success at 70%, slightly above the industry average. The question then becomes what value can be placed on a drug that treats the vulnerable and could enable a return to the old normal? Our Bull case extends to £50/sh based on the valuations of Moderna/BioNTech with a need for SNG001 whether or not the vaccines prove successful.
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