Roth resumes coverage of Aduro at buy

Roth Capital Partners has reestablished estimates, a ‘buy” rating, and $17 price target for Aduro Biotech (NASDAQ:ADRO) based on a sum-of-parts, probability-adjusted net present value analysis. The stock closed at $11 on March 6. 

“We believe the company has assembled an impressive collection of immuno-oncology assets and has demonstrated encouraging proof-of-concept clinical results in mesothelioma,” writes analyst Mark Breidenbach.

“In our view, multiple clinical readouts expected in 2017 could further de-risk Aduro’s main platform technologies and combination strategies,” he added. In addition, Aduro’s cash runway, potentially extending to profitability, could allow unimpeded development in the near term.

Mr. Breidenbach said Aduro’s STING agonists are designed to convert tumor microenvironments from immunologically “cold” to “hot,” potentially expanding the reach of standard-of-care checkpoint inhibitors in a variety of tumors.

He pointed out that the STING pathway is a newly-discovered mediator of anti-cancer immunity whose clinical applications are being spearheaded by Aduro.

“In our opinion, previous clinical successes with Toll-like receptor agonists and recent evidence that STING agonists could be even more effective substantiate the enthusiasm surrounding this approach,” he added.

As with Aduro's other platform technologies, “we believe STING agonists are ideal candidates for combination immunotherapies and plans to test them with PD1 antagonists are underway. We anticipate the first clinical data with ADU-S100 might come as early as the second half this year,” Mr. Breidenbach said.