HCW starts Tocagen at buy; PT $14.50

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H.C. Wainwright initiated coverage of Tocagen (NASDAQ:TOCA) with a “buy” rating and price target of $14.50. The stock closed at $9.64 on June 8.

Analyst Swayampakula Ramakanth writes that the company’s lead product, Toca 511 + Toca FC, is a two-part targeted chemotherapy that is currently in a pivotal Phase 3 study for the treatment of recurrent high-grade glioma (rHGG), an indication that includes glioblastoma multiforme and anaplastic astrocytoma and has very poor prognosis.

In a previous study with 56 patients, five out of 23 patients who received therapeutic “high doses” of Toca 511 + Toca FC achieved complete responses with a median duration of 36 months. The median overall survival of all patients in this cohort was 14.4 months, which compares favorably to historical overall survival rates of six-to-nine months on current therapies.

Toca 511 + Toca FC received breakthrough therapy designation from the FDA in February 2017 and “in our view has the potential to become the new standard of care for this difficult-to-treat indication,” he added.

Mr. Ramakanth said Tocagen is expected to report multiple clinical updates in the next 12-to-18 months, which “we believe could become major catalysts for the stock.”

The most important of these are the planned interim and final results from the pivotal Phase 3 TOCA 5 study in rHGG. The first interim readout is scheduled to occur after 50% of patient events, which is expected in second half of 2018.

Stephen Kilmer