Roth starts PhaseRx at buy

Roth Capital Partners has initiated coverage of PhaseRx (NASDAQ:PZRX) with a “buy” rating and 12-month price target of $8. The stock closed at $5 on Thursday.

“In our opinion, PhaseRx’s technology platform, combined with promising preclinical results, first mover advantage in the multi-billion dollar i-ERT market opportunity, a number of potential upcoming milestones, and a unique scarcity value, make PhaseRx shares well positioned to perform in the coming 12-to-18 months,” writes analyst Sa’ar Yaniv.

PhaseRx has developed a technology that allows delivery of mRNA into liver cells, which could allow the company to target various liver diseases, either therapeutically, through production of enzymes/proteins, or through gene editing via nucleases.

PhaseRx is targeting urea cycle disorder diseases, an unmet medical need. Mr. Yaniv said conventional enzyme replacement therapy (ERT) cannot replace those enzymes, and the only options are adjunctive therapy and liver transplant. “PhaseRx’s i-ERT preclinical data demonstrated potential to correct the disease, with no toxicity to date,” he added.

He said PhaseRx is currently the only company in the ERT space that is attempting to replace liver enzyme function directly inside liver cells. “We conservatively estimate the market for PhaseRx’s first three development candidates at over $1.5-billion,” he said. “Various other factors could expand the market over the coming five-to-10 years.”