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BTIG Initiates Coverage On Sunesis Pharmaceuticals, Believes Company 'Will Be Breakeven By 2017' By Kevin Riley
January 5, 2015 7:19 PM
BTIG initiated coverage on Sunesis Pharmaceuticals, Inc. (NASDAQ: SNSS) Monday with a Buy rating and $5.50 price target.
Analyst Hartaj Singh believed the “current valuation reflects the Street assuming a 15-20 percent probability of vosaroxin approval in the US and EU. We believe the probability of US/EU approval for lead-asset vosaroxin is 50 percent based on the robustness of the VALOR trial and the high unmet need in relapsed/refractory (R/R) acute myeloid leukemia (AML).”
Singh noted that the “VALOR trial did miss its primary endpoint, a cause for concern regarding FDA and European Medicines Agency (EMA) approval. However, we believe the totality of the VALOR data will sway regulators favorably to approve vosaroxin in patients >60 years old (~2/3 of R/R AML patients).”
“We believe the company will be breakeven by 2017 – assuming US/EU approval – and will see rapid operating leverage due to the small cost base of operating in R/R AML, an orphan disease-like area. We see adjusted EPS of $6.74/share in 2019, 3 full years post-launch,” according to the analyst note.
The key risk to Singh’s thesis “would be FDA and/or EMA non-approval of vosaroxin in R/R AML.”
The $5.50 price target was based on a “stand-alone vosaroxin valuation” at $10 per share and applied a “50 percent probability of approval plus cash”