Maxim starts Adial Pharma at buy; PT $5

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Maxim Group initiated coverage of Adial Pharmaceuticals (NASDAQ:ADIL) with a “buy” rating and $5 price target. The stock closed at $1.88 on Oct. 29.

Adial is developing AD04, an ultra-low-dose ondansetron therapy for the treatment of alcohol use disorder (AUD).

In the Phase 2b study, AD04 demonstrated reduced drinks per drinking day, decreased percent heavy drinking days and increased percent days abstinent. Adial has also identified genetic markers that may be predictive of AD04’s therapeutic benefit. A Phase 3 study is slated to begin in the EU in the first half of 2019, with the U.S. to follow, writes analyst Jason McCarthy,.

As Ondansetron has been on the market since 1991 for acute nausea/vomiting, safety is well established and AD04 is used orally at a fraction of the dose, he said, adding, “We see this as de-risking.”

Mr. McCarthy said AUD affects 35 million people in the U.S., 55 million in the EU and is a potential multi-billion dollar opportunity. In addition, less than 5% of patients seek treatment for multiple reasons.

“Adial's AD04 is a de-risked asset with potential to have success in the under-served AUD market,” he added. “With proof-of-concept data in hand and a Phase 3 program initiating soon, we see upside in ADIL shares at the current sub-$20-million valuation.”

Stephen Kilmer