Ladenburg starts Albireo Pharma at buy

Ladenburg Thalmann initiated coverage of Albireo Pharma (NASDAQ:ALBO) with a “buy” rating and $40 price target. The stock closed at $20.28 on Feb. 15.

Albireo is focused on the development of novel bile acid modulators for the treatment of rare pediatric liver diseases and for the treatment of GI diseases.

The company’s lead program, A4250, is currently completing Phase 2 development and is on track to launch Phase 3 development in the first half this year for the treatment of an orphan pediatric disease.

“We are encouraged by the initial Phase 2 data from the first five dose cohorts in this dose-escalation trial, which have shown a reduction in the concentration of serum bile acids and a reduction in pruritus in patients treated with A4250,” writes analyst Matthew Kaplan.

“We expect Albireo to initiate a PFIC [progressive familial intrahepatic cholestasis] Phase 3 study in mid-2017, with Phase 3 data expected in mid-2018 and an NDA filing by the end of 2018, which would facilitate approval in the U.S. and EU by the end of 2019,” he added.

Mr. Kaplan figures A4250 could offer a “differentiated game changing product profile for the treatment of pediatric cholestatic liver diseases, with greater than $975-million of revenue at peak in the U.S.”

Albireo’s elobixibat is in Phase 3 development for the treatment of chronic idiopathic constipation (CIC). Based on the Phase 2 results and the positive Phase 3 results in Japan, “we believe there is a relatively strong possibility Albireo could find a partner in the U.S. and EU for the Phase 3 development and marketing of elobixibat in these regions,” Mr. Kaplan said

“We believe elobixibat could represent an attractive alternative to the current CIC and estimate it could generate greater than $400-million in peak net revenue in the U.S. in this indication,” he added.