A July 9 research report indicated that H.C. Wainwright & Co. initiated coverage on RXi Pharmaceuticals Corp. (RXII:NASDAQ) with a Buy rating and a $3 per share 12-month price target. The share price now is around $1.97 per share. "We believe that the current valuation represents a potentially intriguing entry point," wrote analyst Ram Selvaraju.
Selvaraju offered these primary reasons for investing in this immuno-oncology firm:
1. "A true original—enhancing cell-based immunotherapy via RNAi": This immuno-oncology firm is employing its self-delivering RNA interference (RNAi) technology ex vivo to substantially boost the antitumor activity of immune cells before they're introduced into patients to treat cancer. This pretreatment of the immune cells allows the activation state to be optimized. The company's RNAi-based molecules have proven to be safe in various topical formulations.
2. "Multiple shots on goal": RXi has multiple candidates that are RNAi-based inhibitors of checkpoints, "the switches that prevent immune cell activation,'' the analyst explained. These assets target various checkpoints, including PD-1, TIGIT and others.
3. "A promising early collaboration": RXi recently agreed to partner on research and development with Iovance Biotherapeutics, "a leader in the field of adoptive cell transfer," noted Selvaraju.
4. "Clinical-stage assets could provide upside and nondilutive capital": RXi aims to outlicense, partner on or sell its two clinical-stage programs, RXI-109 which targets connective tissue growth factor and Samcyprone, a diphenylcyclopropenone ointment. Such transactions, Selvaraju pointed out, would generate nondilutive capital and "long-term upside via royalties and milestones in the coming months."
5. "Negligible value currently attributed to technology platform": RXi's current market cap is about $10 million and its enterprise value just over $5 million. However, H.C. Wainwright values the company's immuno-oncology platform at roughly $30 million based on the valuations of other companies and of recent transactions in the space.
Following RXi's 1:10 reverse split in January 2018, Selvaraju said, there was downward pressure on the stock with continued overhang since. Now is an opportune time to get into the name, he concluded.
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Disclosures from H.C. Wainwright & Co., RXi Pharmaceuticals Corp., July 9, 2018
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Raghuram Selvaraju, Ph.D., certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst’s household has a financial interest in the securities of RXi Pharmaceuticals Corporation, Biogen, Inc, CytRx Corporation, Fate Therapeutics, OncoSec Medical Inc., Sorrento Therapeutics, Inc. and Synlogic, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of June 30, 2018 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of RXi Pharmaceuticals Corporation, Biogen, Inc, CytRx Corporation, Fate Therapeutics, OncoSec Medical Inc., Sorrento Therapeutics, Inc. and Synlogic, Inc.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst and/or the research analyst’s household has a financial interest in and own the securities of Iovance Biotherapeutics, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of June 30, 2018 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Iovance Biotherapeutics, Inc.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Biogen, Inc, Fate Therapeutics and Sorrento Therapeutics, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm or its affiliates did receive compensation from RXi Pharmaceuticals Corporation, CytRx Corporation, Iovance Biotherapeutics, Inc., OncoSec Medical Inc. and Synlogic, Inc. for investment banking services within twelve months before, and will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
H.C. Wainwright & Co., LLC managed or co-managed a public offering of securities for RXi Pharmaceuticals Corporation, CytRx Corporation, Iovance Biotherapeutics, Inc., OncoSec Medical Inc. and Synlogic, Inc. during the past 12 months.
The Firm does not make a market in RXi Pharmaceuticals Corporation, Biogen, Inc, CytRx Corporation, Fate Therapeutics, Iovance Biotherapeutics, Inc., OncoSec Medical Inc., Sorrento Therapeutics, Inc. and Synlogic, Inc. as of the date of this research report.