Leerink starts resTORbio at OP; PT $36

iStock-497130942.jpg

Leerink launched coverage of resTORbio (NASDAQ:TORC) with an “outperform” rating and $36 price target. The stock closed at $18.76 on Feb. 16.

“Our rating and valuation are based on our sales forecast for lead asset, RTB101, +/- RAD001 in respiratory tract infection (RTI) prevention in the elderly,” writes analyst Geoffrey Porges.

resTORbio has the most advanced mTORC1 inhibitor program in development, he said, with strong proof of concept in fighting immuno-senescence (aging) in the elderly based on a previously conducted Phase 2a study validating the mechanism for preventing RTIs.

“The ongoing Phase 2b study, with the primary endpoint of reducing RTIs in the high risk elderly population, is expected to readout in the second half of 2018 and will be a huge binary catalyst for the stock, offering the potential for more than 100% upside or most likely 70% to 80% downside depending on the result,” Mr. Porges said.

If the phase 2b confirms the highly significant results in the similar Phase 2a study, he said resTORbio will start two pivotal Phase 3 studies during 2019 and could be approved by 2021 in the U.S. and 2022 in other regions of the world.

“Our research suggests that the market for an oral, infection-preventing medicine in the elderly population could be more than $2-billion a year in absolute sales in the U.S. alone, even with conservative pricing and penetration assumptions,” Mr. Porges said.