Rodman assumes coverage of NephroGenex at neutral

Rodman & Renshaw analyst Raghuram Selvaraju has assumed coverage of NephroGenex (NASDAQ:NRX) with a “neutral” rating and without a price target. The stock was quoted at 40 cents Friday afternoon.

The board of NephroGenex decided in late February 2016 to pause the oral Pyridorin pivotal program in diabetic nephropathy, to effect a restructuring of the company’s operations and implement a strategic transaction.

This decision was made in light of the trial costs, the company’s cash balance and condition of the capital markets that could lead to a significant dilution for existing shareholders, Mr. Selvaraju writes.

“We believe that this decision was not based on the observed efficacy or safety of Pyridorin itself,” he added.

Management has indicated a need for a total of roughly $25-million to $30-million in capital to complete the Pyridorin pivotal program.

“Given the current market environment, the fact that the firm did not have confidence in its ability to raise the capital necessary to finish the Pyridorin Phase 3 program itself without an unacceptable degree of dilution to current shareholders, and what we believe is a low likelihood of the firm attracting strategic partners to invest in completion of the Pyridorin program, we believe remaining [on] the sidelines constitutes the most appropriate action at this juncture,” he added.